When considering a personal loan, one of the key decisions is choosing between a fixed

or variable interest rate. Understanding the differences can help you select the best

option for your financial needs.

Fixed Rate Personal Loans

A fixed-rate loan means that the interest rate remains the same throughout the loan

term.

Pros:

• Predictable monthly repayments.

• Protection from interest rate increases.

• Easier budgeting and financial planning.

Cons:

• Less flexibility for extra repayments.

• May have higher upfront fees.

• No benefit from potential interest rate decreases.

Variable Rate Personal Loans

A variable-rate loan means that the interest rate can change over time based on market

conditions.

Pros:

• Possibility of lower interest rates.

• Flexibility for additional repayments.

• Potential to pay off the loan faster without penalties.

Cons:

• Monthly repayments may fluctuate.

• Risk of interest rate increases, leading to higher repayments.

• Harder to budget due to potential changes.

Which One Should You Choose?• If you prefer stability and predictable repayments, a fixed-rate loan may be

better.

• If you’re comfortable with some flexibility, a variable-rate loan might suit your

needs.