Are Auto Loans Variable Or Fixed? What’s the difference between a variable and fixed rate? Fixed rates stay the same for the lifetime of your loan, while variable rates change based on market conditions.
Most auto loans are fixed
The most common type of auto loan is a fixed rate loan, which has a fixed interest rate that stays the same for the life of the loan. These loans are good for people who plan to keep their car for a long time and have consistent, predictable income. Most lenders require you to have excellent credit in order to qualify for one of these loans.
Variable auto loan rates can change over time
Variable rate auto loans have the potential to save you money in the long run. If you plan to keep your car for a long time, switching from a fixed-rate loan to a variable-rate loan could save you thousands of dollars. However, if you plan to sell or trade in your car before it’s paid off and pay off any remaining balance on your loan, then it may be better that you stick with a fixed-rate loan.
If you’re unsure whether or not it will make sense for you financially to go with either type of auto loan, contact one of our friendly Financial Advisors today!
Auto loan rates are typically fixed, but you can choose to do a variable rate
When you apply for a loan, your lender will offer you a fixed or variable interest rate. The majority of auto loans are fixed rates. Lenders prefer to offer these kinds of loans because they’re more predictable and easier to budget for in the long run. Fixed-rate debt is also less risky than variable-rate debt: if interest rates drop, then you’ll be paying more on your loan—but if they rise, then you’ll pay less so there’s no uncertainty about what kind of rate change could happen next month or next year as it relates to your payments.
Variable auto loan rates are generally higher than fixed ones (about 3% points higher). But borrowers who opt for this type of financing usually do so because they expect their credit score or income level will improve over time—and therefore want access to lower monthly payments now while waiting patiently until those gains are achieved before locking down a lower rate through refinancing with another lender at some point in the future when prospects look better than ever before!
If you’re planning on buying an expensive vehicle soon but aren’t sure whether going with one type over another would benefit more people like yourself more often than not; take some time now think through all possible scenarios ahead before making any decisions whatsoever!
Even though variable auto loans are a good option for some people, they aren’t the best choice for everyone. If you’re looking to buy a car with an adjustable rate loan, it’s important to know what your options are before deciding which one is right for you.