If you’re looking for a loan of any sort, one of the most important things you need to consider is whether it has a fixed or variable rate. As you know, loans work by way of a financial institution giving you a specific amount of money that is to be paid back according to the details of the loan contract you signed. Financial institutions make their money from loans by charging interest on the money you borrow; this is what is known as your loan rate.
Depending on your intended purpose for taking the loan out and how you plan to pay it back, fixed-rate and variable-rate loans offer different advantages. To make the best decision about which loan type is right for you, you need to know the core differences between each of these loan types so that you can see which one matches your financial objectives the best.
Continue reading to find out all of the critical information you need to know as it relates to fixed-rate and variable rate loans.