Though most personal loans are tagged with fixed rates, some lenders do offer variable-rate products. Variable rates typically start lower than fixed rates, but they can also rise over time according to market conditions.
- • Fixed: Your rate and monthly payment are static during repayment.
- • Variable: Your rate and monthly payment is subject to change during repayment.
Choose a fixed or variable rate depending on whether you like the idea of a consistent monthly payment amount or have the stomach — and budget flexibility — for a fluctuating amount due.
Once you’ve decided on either a fixed or variable rate, make apples-to-apples comparisons among lenders by pitting fixed or variable APRs against each other. Unlike a base rate, the APR accounts for each lender’s fees, such as for loan origination.