When you take out a personal loan you usually have the choice between a fixed-rate and a variable-rate loan. So which is better? It depends on your situation.
If you think interest rates will go up:
If you think interest rates will go up you might want to choose a variable-rate loan. With this type of loan the interest rate on your loan will change along with the prime rate. That means that your payments could go up or down depending on what happens with interest rates.
If you think interest rates will stay the same or go down:
If you think interest rates will stay the same or go down you might want to choose a fixed-rate loan. With this type of loan the interest rate will stay the same for the life of the loan. That means your payments will stay the same too.
There are other things to consider:
Remember with a variable-rate loan your payments could go up or down. If you’re not sure you can handle that kind of fluctuation a fixed-rate loan might be a better choice. On the other hand variable-rate loans often have lower interest rates than fixed-rate loans at least at first. So if you think you can handle the fluctuating payments and you’re okay with taking a bit of a risk a variable-rate loan might save you some money in the long run.
The bottom line is that you need to think about your own situation and what’s best for you. If you’re not sure talk to a financial advisor. They can help you figure out which type of loan makes the most sense for you.
Is a personal loan a variable or fixed rate?
A personal loan can have a fixed or variable interest rate.
How is the interest rate on a personal loan determined?
The interest rate is determined by the creditworthiness of the borrower and the type of loan.
What are the benefits of a personal loan?
The benefits of a personal loan include the ability to borrow a large amount of money the ability to choose a repayment schedule and the possibility of a fixed interest rate.
What are the disadvantages of a personal loan?
The disadvantages of a personal loan include the possibility of a high interest rate the requirement of collateral and the need for a good credit score.
How much money can I borrow with a personal loan?
The amount of money you can borrow with a personal loan depends on the lender your creditworthiness and your income.
Do I need collateral for a personal loan?
Some personal loans may require collateral but not all.
What is the minimum credit score I need for a personal loan?
The minimum credit score you need for a personal loan depends on the lender but generally you will need a credit score of at least 580.
How do I apply for a personal loan?
You can apply for a personal loan by going to a bank or credit union and filling out an application.
How long does it take to get a personal loan?
The time it takes to get a personal loan depends on the lender but it generally takes a few days to a few weeks.
What do I need to qualify for a personal loan?
In order to qualify for a personal loan you will need to have a good credit score and a steady income.
What is the interest rate on a personal loan?
The interest rate on a personal loan depends on the lender your creditworthiness and the type of loan.
What is the maximum interest rate on a personal loan?
The maximum interest rate on a personal loan depends on the lender but it is generally around 30%.
What are the fees associated with a personal loan?
The fees associated with a personal loan include an origination fee a late payment fee and a prepayment fee.
How do I repay a personal loan?
You can repay a personal loan by making regular payments to the lender which will go towards the principal and the interest.
What happens if I can’t repay a personal loan?
If you can’t repay a personal loan you will be responsible for the remaining balance plus any fees and interest.
