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Whether you’re planning on using a loan to do some minor home renovations or to help pay for something big like a wedding, a five-year fixed rate loan could be the one for you. A fixed rate personal loan offers you the benefit of the same repayments no matter what happens in the market — making budgeting a little less stressful.
Yes. There are two different routes you can travel when shopping for a personal loan, each suited for different loan purposes and borrowers. Depending on what you need, either a secured or unsecured loan may be what you’re looking for:
Secured fixed rate personal loan | Unsecured fixed rate personal loan |
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When you apply for a fixed rate personal loan, the rate you’re approved for will be locked in for the full five-year term. This simplifies calculating your payments, as you won’t have to worry about a variable interest rate that changed overtime.
Before you apply for a loan, make sure that it can fit into the puzzle that is your personal finances. Remember, there are consequences when defaulting on your loan, it could damage your credit and you could lose the asset you used as collateral if your loan is the secured type.
We’ve ran through a few scenarios to calculate a monthly payment for different rates and loan amounts.
Loan amount | 5% interest rate | 10% interest rate | 15% interest rate | 20% interest rate |
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$5,000 | $94.36 | $106.24 | $118.95 | $132.47 |
$10,000 | $188.71 | $212.47 | $237.90 | $264.94 |
$15,000 | $283.07 | $318.71 | $356.85 | $397.41 |
$20,000 | $377.42 | $424.94 | $475.80 | $529.88 |
Estimate your monthly payment with a personal loan calculator
If you’re wondering which fixed rate loan is right for you, compare your options to find which will benefit you the most. Keep the following features in mind:
You might, but it’s not guaranteed. Lenders set the minimum income, employment, credit and financial criteria that must be met in order for you to be eligible for the loan. Ensure you meet these before you submit your application.
Take this point into major consideration, especially with a secured personal loan as you could lose your asset. Make sure you calculate and budget properly to ensure you’ll be able to make payments on time each month.
Before you take a loan for this repayment term, you may want to ensure it fits your personal preferences and long-term financial goals. Here are a few pros and cons to consider:
Depending on what you need the extra funds for, there are other options to explore. Perhaps that idea of a fixed rate loan doesn’t feel like a match and a variable rate loan has more appeal. With a variable rate loan, if the market gets more competitive, you’ll likely see a drop in your interest rate — however, this works the opposite way as well.
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