What is a Fixed Rate loan and a Variable Rate loan and what is difference?
A. A Fixed Rate is loan is loan that has the same interest rate over the number of years it is fixed. For example a 7.55 3-year Fixed Rate loan will have the same interest rate throughout the 3-year period. The repayments for that period will not change. You will know exactly what your repayments will be and can set a budget accordingly. A Variable Rate loan is a loan whose interest rate may change over time depending on market conditions. If the market rates go up, there is likely outcome of your interest rate increasing as well, which will make your monthly payments higher. On the flip side, if market rates go down, there is the same likely outcome of your interest rate decreasing, which will make your monthly payments less, thus saving you money.
