Is a five-year fixed rate personal loan the right financial move for you?
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.
Compare a selection of online loan offers with five-year terms
|Provider||Loan Term||Starting APR||Requirements|
LendingClub Personal Loan
|3 to 5 years||6.95% to 35.89%||US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.||Go to site More|
Prosper Personal Loans
|3 or 5 years||6.95% to 35.99%||Must be 18+ years old, an American citizen or US permanent resident and have a 640+ credit score.||Go to site More|
SoFi Personal Loan Fixed Rate (with Autopay)
|2 to 7 years||6.79% to 15.49%||Ages 18+, US citizen or permanent resident||Go to site More|
Even Financial Personal Loans
|2 to 7 years||3.84% to 35.99%||Credit score of 550+, American citizen or permanent resident and ages 21+||Go to site More|
Are there different fixed-rate personal loans?
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|
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.
What will a five-year fixed rate loan cost me?
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|
What factors should I compare?
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:
- Interest rates. These loans all come with fixed interest rates, but compare them with loans that have similar features to see how competitive the rate is.
- Fees. Will you be charged an origination fee? Are there any monthly or annual fees? These can add up over five years, so check before you apply.
- Loan amount. Ensure the loan amount is sufficient and you’ll receive the loan when you need it. It’s important to factor in any application fees or loan origination fees, as these can come off the top of your loan and leave you shortchanged.
Will I be eligible for the loan I want?
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.
Should I take out a five-year fixed rate personal loan?
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:
- Low monthly payments. Loans with long terms generally have smaller monthly payments.
- Fixed payments. Your payments won’t fluctuate throughout the loan term.
- One set rate. You’ll be locking in a low rate the entire life of the loan.
- More interest charges. Even though your payments may be lower, you’ll end up paying more in interest as loan terms get longer.
- Less flexibility. Your financial circumstance may change during the five years, which could make it difficult to meet your payments.
Compare more personal loan options
Alternative credit options 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.