Fixed and variable rates are most common when dealing with mortgage loans, though there are other types of loans that offer both types of interest as well. If you're not sure which type of interest would be best for you, or what the main differences are between the two types, then the information presented below might help you to make an important decision concerning your next loan.
Fixed Rates
Fixed interest rates are rates which will not fluctuate as time goes by, regardless of how much national interest rates may rise or fall. They are often used as part of a promotion, with low introductory fixed rates being replaced by either variable rates or a higher fixed rate after six months or more have passed. Generally, the only way to change a fixed interest rate is to refinance the loan and get either a lower fixed rate or a variable rate on the new loan agreement.
Variable Rates
Unlike fixed rates, variable rates fluctuate in response to changes in national rates. When national rates increase, a variable rate loan will also increase
but when national rates decrease, the variable rate will do the same. Variable rates are the most common type of interest rate, and are generally used for small loans, credit cards, and many other types of debts. It can be difficult to predict exactly how much you will pay in total with variable rates, but if national interest rates stay low then you may end up paying much less than originally estimated.
Advantages and Disadvantages of Fixed Rates
Fixed rates have several advantages and disadvantages, and may or may not be right for you and your loan needs. They provide security against increases in national rates, meaning that you might end up paying a much lower rate if you've locked in a lower fixed rate than the current national rate. If national rates fall, however, you may end up paying more than you would with a variable rate. Promotional fixed rates are generally set low, but as they only last for a limited amount of time you might end up paying a much higher rate once they expire. Fixed rates can make budgeting easier, however, due to the fact that all payments should be for the exact same amount.
Advantages and Disadvantages of Variable Rates
Like fixed rates, variable rates have their own advantages and disadvantages. While they can occasionally lead to lower interest rates than their fixed counterparts, the fluctuations of national rates will generally bring them up again before you've finished repaying the loan. Variable rates can sometimes grow to several times the rate you were originally paying in a matter of months, though there is always the possibility of having just as sharp of a drop as well. With variable rates most loans will have the same monthly payments, though the number of payments may be extended or the final payment may be a different amount due to the fluctuating interest that has been accrued over the loan term.
The 5 Year Term Life Insurance Policy Or Rider 5 year term life insurance has been around in insurance circles for a very long time. It can be sold as a policy or as a rider to a permanent life insurance policy. It was never promoted much by life insurance agents perhaps because of it s extremely low premium which results in a very low commission. Another possibility is that 5 years is a very short period of time for a life insurance policy.
Why 5 Year Term Life Insurance
5 year term life does have it s place in the portfolios of many life insurance buyers and can fulfill a very important need. If you have a short term need for life insu ..
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Term Life Insurance: Find Cheap Quotes And Best Plan In One PackageTerm life insurance is a relatively easy to understand concept. Term life insurance policies stay in effect for a predetermined length of time (the term). During the term of the policy, the insured pays a regular premium. If, at any time during the term, the insured should die, death benefits are paid directly to the designated beneficiary.
Unlike other insurance policy types, term life insurance policies offer limited flexibility. Additionally, they do not create any residual or cash value. When the term of a term life policy expires, the policy just ceases to exist-it has no additional valu ..
About The Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
John MussiChoosing Between Fixed Rates and Variable Rates
