Fixed Rate Loan Guide

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Loans can come with two different types of interest rates: fixed-rate or variable-rate.

With a fixed-rate loan, your interest rate remains the same throughout your loan term. Since your interest rate determines your monthly payments, a fixed-rate loan means your monthly payments will always be the same.

On the other hand, variable-rate loans have interest rates that fluctuate over time. While these loans can, in some cases, save you money on interest, they are very unpredictable. 

With a fixed interest rate, you don’t have to worry about your payments going up or down. These loans generally offer more predictability and safety than variable-rate loans.

Types of Fixed-Rate Loans

Nearly any type of loan is available with a fixed interest rate, including:

●     Student Loans

●     Personal Loans

●     Mortgages

●     Secured Loans

●     Unsecured Loans

●     HELOCs

●     And More

Lenders will often give you the opportunity to choose between fixed and variable interest rates.

 In most cases, fixed-rate loans are a safer option. Though, variable-rate loans are generally a better choice if you expect to be able to repay your loan quickly.

Benefits of Fixed-Rate Loans

Fixed-Rate loans offer a number of great benefits, including:

●     Wide availability

●     Predictability

●     Consistent monthly payments

●     Flexible repayment options

●     Favorable interest rates

●     And more 

Generally speaking, fixed-rate loans are a great option for borrowers that value predictability over the possibility of saving money on interest.

How Much Do Fixed-Rate Loans Cost?

The total cost of your fixed-rate loan is dependent on several factors, including the type of loan, loan balance, interest rate, fees, and the term.

Interest Rate: The great thing about fixed-rate loans is that it makes it easy to calculate the total cost of your loan once you have an offer. Your interest rate will be determined largely by your credit history and income. You can also reduce your interest rate by providing collateral to secure your loan.

Loan Limit: Your loan limit will depend primarily on what type of loan you take out and the lender that you choose. For example, student loans often have loan limits dependent on your school’s cost of attendance. Alternatively, personal loans are typically available in amounts up to $50,000.

Term: A lower interest rate might not save you any money if it comes with a much longer term. While a longer term may lower your monthly payments, it could end up costing you more in the long run.

 Fees: Lenders may charge a variety of fees, including origination, late payment, prepayment, and other fees. Be sure to understand all the fees that your lender charges so you aren’t caught off guard after signing your loan agreement.

Once you have all of these numbers, you can use an online loan calculator to calculate your monthly payments as well as the total cost of your loan.

Tips for Applying for a Fixed-Rate Loan

Applying for a loan isn’t a difficult process, but it’s important to be prepared and know what steps you can take to find the best loan rates and terms possible. 

If you’re ready to apply for a fixed-rate loan, keep these tips in mind to help you find the best loan for your needs.

Determine What Type of Loan You Need

First things first, you need to determine what specific type of fixed-rate loan you need.

Need help paying for school? A private or federal student loan is generally your best option.

Need money to finance home renovations? A personal loan is probably the best choice.

Trying to get your business off the ground? Small business loans are what you’re looking for.

Before you start looking for lenders, you need to know exactly what type of loan you’re looking for.

Get Quotes

Once you know what you’re looking for, it’s time to start looking for lenders.

As you search for the perfect lender, be sure to get and compare quotes from at least three or four different loan providers. This will help ensure that you get the best interest rates and loan terms possible.

Don’t settle for the first option you find.

Apply

Now, all that’s left is to apply. You’ll likely need the following documents to complete your application: 

●     Identification

●     SSN

●     Bank statements, pay stubs, tax returns

●     Proof of employment

●     And more

Check with your lender for a more comprehensive list of documents.

If you’re approved, be sure to review your loan offer one last time to make sure you agree to the terms. If you do, you can sign your agreement and receive your funds.

Typical cost is

$463/Month

Monthly payment on 2 year loan with no origination fees, 10.31% interest, good credit, and $10,000 balance, assuming unsecured