Fixed Loan - Compare and Apply for an Australian Fixed Loan Online

Fixed Loan

Fixed loan applications are very popular amongst people who want a measure of stability when starting a major new investment. For the first few years of a loan with many lenders, you can choose to have a fixed loan rate rather than a variable rate. This gives some peace of mind, but can end up more costly than a variable rate if the fixed loan is taken out at the wrong time. Nevertheless, if you want to be sure of what you’ll be paying in the next few years to come, you’ll do well with a fixed loan.

Anyone applying for a loan is faced with one basic question: whether to choose a fixed loan or an adjustable rate. For many, the answer is obvious: fixed loans offer more stability, better security, and protection from market fluctuations. But some are also hesitant because of the opportunities they can miss with a fixed loan. For just a little risk, you can go for a variable loan and pay off your debt sooner, lower your repayments, and enjoy even better rates. How do you know which one is for you?

At Fixed Loan, we answer this question and a lot more. Fixed Loan is the leading source of fixed loan information and advice online, with a database of useful articles and comparisons designed to make these decisions easier for the everyday consumer.

What is a fixed loan?

A fixed loan or fixed rate loan uses a standard interest rate for the life of the loan. This is in contrast with a variable loan, wherein the interest varies depending on the market rates. This scheme is available in short-term and long-term loans, although they usually apply to home loans spanning 15 years or more. Fixed loans are the most common type of structure across all loan types.

What are the advantages of a fixed loan?

Stability: This is the main selling point of fixed loans. It locks the interest at the current rate, which means you pay the same interest over the years regardless of the market rates. That way, when market rates soar, you won't be stuck with a higher bill than you're prepared for.

Lower introductory rates: Many lenders offer an attractive 'honeymoon rate' to draw in potential borrowers. In a typical fixed loan package, the lender will offer a low adjustable rate for the first few years and revert to the fixed rate after the honeymoon period.

What are the disadvantages?

Longer terms: Fixed loans are usually applied to home loans and other long-term packages. This is not because they cost more, but because lenders want to earn interest for longer periods. For example, if they're earning a steady 5% interest from your loan, they'll want to keep it going as long as possible.

Higher interest: The price of stability in a fixed loan is higher interest. Because there's less risk for you and more for the lender, you pay for it in the form of higher rates throughout the loan term.

How do I choose a fixed loan?

A common misconception is that lower interest means a better loan offer. While it does help a good deal, other factors can cancel out the savings you can get from a low interest rate. Maybe there's less loan flexibility (i.e. penalties for early repayment) or a lot of hidden fees. Read the entire contract carefully and clarify any vague claims with your lender.