Fixed and Variable Rate Car Loans

Fixed vs Variable Interest Rates

A fixed interest rate is a rate that does not increase or decrease over the term of the loan. A variable interest rate fluctuates depending on the prevailing interest rates. Recently in Australia, more and more lenders are moving towards a fixed interest rate structure. Traditionally, variable interest rates were offered by banks, however due to pushes from consumers they are switching to fixed interest rates for car loans.

Benefits of a fixed interest rate car loan

Certainty of payments Ability to budget more precisely for the future Generally, cheaper than variable over the term of the loan

Benefits of a variable rate loan

Potentially lower rates, particularly in the beginning.