If you want to get a loan at a cheap rate, then you should look at the possibilities of applying for a variable rate loan. These loans have an APR rate that can vary depending on the base interest rate. This can either work in your favour or against you, depending on whether rates rise or fall. If you want to know more about the benefits of variable rate loans, then here are some tips for you.
What is a variable rate loan?
A variable rate loan is a type of loan that has a changing interest rate. Usually, the APR of the loan will track the base rate of interest, but obviously a few points above this. This means that should the interest rate fall, then the rate of the loan will likely fall. However, if the rates rise then so will the APR of your loan.
Interest rate risk
Of course, the problem with taking out a variable rate loan is that the interest rate can vary, which is a risk if the rates rise. If you are on a fixed income, then getting a variable rate loan could cause problems for you should your monthly payments increase due to an interest rates rise. Before getting a variable rate loan, be sure that you can keep up with repayments even if the...
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