Fixed rate Vs Variable

[redbhoy]

I applied for a top up on a current loan recently and got quoted 7.4% on a fixed rate but 10.?% on a variable. (<15000)
I always thought the fixed rate was higher. Is there any reason for this?

 

[sinead01]

most variable rates would be quoted on a tiered basis, therefore you would be paying a lower variable interest rate on a lower amount, i.e €1000 compared to a higher rate for the loan you were looking for.
i would always recommend a variable rate as there are more options available to you such as paying in lump sums, as usually with these loans there are no charges or penalties for doing this, so in the long run you can finish your loan sooner. there should also be a small fee for clearing full amount off.

 

[lff12]

Usually fixed rates are lower but you cannot pay it off early without penalties.
Having said that its useful if you feel that interest rates are likely to rise then fixed rates will save more over a longer term. On the other hand if they fall you'll save with a variable rate loan.

With interest rates at historical lows its pretty likely that rates will rise so the fixed option sounds good.