Are you thinking about getting a personal loan and have some questions? Don’t worry, so does everyone else! We answer some of the frequently asked questions about Personal Loans here so you can be in the know!
Q2. What does fixed vs variable rate mean?
There are two options when it comes to personal loan interest rates – you can get an interest rate that is fixed, or variable.
A fixed personal loan charges a fixed interest rate, therefore, your repayments will not change for the entire term of the loan.
Fixed personal loans offer stability. You know exactly how much your repayments are each month and can take this into account when budgeting.
Most fixed personal loans do not allow you to make extra repayments towards your loan in order to repay it early. Those that do, typically charge additional fees that may outweigh the benefit of early repayment.
A variable personal loan on the other hand charges an interest rate that is subject to change. As such, your repayments may vary during the life of your loan.
Many variable personal loans allow you to make extra repayments towards your loan in order to repay it early. Some also allow you to access these funds via a redraw facility and use them for other purposes.
When choosing a fixed or variable loan it all comes down to personal preference and the pros and cons of each for your needs.
Still have questions? You can read more about what you need to know about personal loans here in our Credit Knowledge section or put your question in the comments section below!
Learnt something? If you think that now you know a little more about them that a personal loan might be right for you, you can compare a variety of Personal Loans right here on our comparison platform.