When it comes to financing your car, one of the most critical decisions that is going to shape your outcome is choosing between a fixed or variable loan. Each option has its own set of advantages and disadvantages, and the choice depends greatly on your financial situation, risk tolerance, and plans for the future. In this blog, we’ll explore the key differences between fixed vs variable rate loans for cars – helping you to make an informed decision. Looking for some expert assistance? Let Fido Finance be your loyal companion through the entire process.
Looking for a new car loan but unsure who to work with, or which rate is going to better suit your lifestyle? Get in touch with our team today to discuss your concerns, your plans, and how we can help make life that little bit easier.
Fixed Rate Vs Variable Rate: Key Differences
Fixed Rate
One of the best things about fixed rate loans is the stability and predictability that it offers. With these types of loans, the interest rate will remain constant throughout the entirety of your loan term (generally one to five years), thus, your monthly payments will remain the same, making it easier for you to budget and plan for the future. It also provides you with more comfort and confidence than you would expect from a loan. People generally choose a fixed rate loan if they’re on the market at the right time, locking them into a smaller interest rate, so that they don’t risk having to pay higher fees should the market make a change.
Variable Rate
A variable rate (also referred to as an adjustable rate), refers to a loan type that is not a concrete rate of interest over the life of the loan term. These rates fluctuate over time as the market interest rates change, or if your lender chooses to increase/decrease the rate based on a range of factors – meaning you need to be able to keep up with the changes financially. People will choose a variable rate if they feel like the market may shift and interest rates drop. If that is to happen, it’s common for individuals to refinance, and lock themselves into a fixed rate to remain at a safe interest rate for the remainder of their loan term.
What If I Can’t Decide?
With all the information available it is easy to feel overwhelmed or stuck trying to make the choice. When you reach out to a Fido Finance broker, they will discuss your personal needs and what options are available or most suitable. If you do know what kind of rate you would like, all you have to do is let our team know what your preference is, so that we can sit down, discuss the ins and outs of the entire process, and find you the best fixed vs variable rate loans, and best loan term.
Every person that comes to Fido Finance is different, meaning their needs, requirements, and situations are all equally as different. We take into consideration all the nitty gritty things that make lending a hassle anywhere else and apply it to the most convenient fixed rate vs variable rate catered to you.
