Small Personal Loan (~3k) Best Buy, Fixed or Variable?

D

Donkey Hoatay

Guest
Hello all,

I'm new to this so apologies if my question is old hat.

On the borrowing side of things, any ideas on which is better to go for in the current climeate - a fixed or variable rate loan?

In context, I'm looking for relatively small loan of just over 3k and hope to pay it off in less than a year.
Looking at the "best buy" quoted interest rates seem to change with each click of the mouse but I'll muddle through.

What I'm not sure about is whether to play safe or go completely wild and pick a variable.

Hope this q isn't too banal (or just daft).
DH

title edited by ajapale
 
Re: Interest rates

Don't think that rates will fall any further in the next year, so a fixed rate may be better. Because you are borrowing small amount, you will probably have to pay a higher rate than would be the case if you borrowed say €10,000 (e.g. tesco have a staggered rate). This of course is just my opinion, and some one more savvy may disagree!
 
Re: Interest rates

It's not just a question of rates. Most fixed-rate loans have built-in penalties if you choose to pay off the loan early, so if you want this flexibility, don't go for a fixed rate.

In general, the banks will charge you for the security of a fixed rate. If you don't need this security (i.e. a 2% hike in interest rates won't leave you struggling to put food on the table), then stick with variable.
 
Re: Interest rates

Great, thanks for the tip.

I think I'll go for the variable since a small hike in interest rates wouldn't bother me too much but I would like to have the opportunity to pay it off quickly if possible.

DH
 
Re: Interest rates

I'm doing some sorting out at the moment too and have just gotten a loan from Bank of Ireland. Their variable rates are lower than fixed rates at the moment (and I also saw that the rates if you apply online are lower than if you ring or go to a branch).
 
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