Fixed interest rate or Variable rate

[Mayfriday0529]

You can see my other post about private school loan consolidation.
I thought i separate this question from my other thread.

What is best, a Fixed interest rate or a variable rate? pros vs. cons?

 

[MrWizzard]

Fixed is better. But costs more "points" to bring down.

 

[MikeyIs4Dcats]

depends on the rate. Fixed at 20% isn't good, but variable in this market could be trouble

 

[HannibalX]

Fixed. Always.

When the economy goes belly up (recession - it does this every few years, no one knows why, democrats and republicans blame each other) the rate will skyrocket and your payment may get to be unbearable. A moderate fixed rate with a payment you can afford is the way to go.

 

[Demon-Xanth]

I won't get variable rate. ESPECIALLY during a time when rates are low. If rates were retardely high and were likely to go down, then maybe.

 

[Garet Jax]

Originally posted by: MrWizzard
Fixed is better. But costs more "points" to bring down.

Not true. If interest rates rise, then fixed is better. If interest rates go down, then variable is better (as long as your rate can drop with it).

Fixed means less fluctuation and therefore easier to plan, but variable rates may end up costing less in the long run.

 

[manlymatt83]

ING direct is going to launch a fixed 30 year mortgage soon =) but you didn't hear it from me

 

[Special K]

Originally posted by: Pale Rider
Fixed. Always.

When the economy goes belly up (recession - it does this every few years, no one knows why, democrats and republicans blame each other) the rate will skyrocket and your payment may get to be unbearable. A moderate fixed rate with a payment you can afford is the way to go.

Wait - if we had a recession, wouldn't interest rates drop, which would make the variable rate loan cheaper?

Wouldn't inflation cause interest rates to rise since the government would be trying to keep people from spending money as fast?

 

[DaveSimmons]

Fixed, and if you've graduated or are close to it then instead of buying down the % rate it might make sense to just make sure there are no prepayment / early payment penalties.

If you can live below your means and make extra payments reducing the principal could save you more over time than buying down the % rate slightly.

(That depends on how much you owe and how much extra you can pay. There are probably loan calculators out there to figure this out.)

 

[HannibalX]

Originally posted by: Special K

Originally posted by: Pale Rider
Fixed. Always.

When the economy goes belly up (recession - it does this every few years, no one knows why, democrats and republicans blame each other) the rate will skyrocket and your payment may get to be unbearable. A moderate fixed rate with a payment you can afford is the way to go.

Wait - if we had a recession, wouldn't interest rates drop, which would make the variable rate loan cheaper?

Wouldn't inflation cause interest rates to rise since the government would be trying to keep people from spending money as fast?

Look at the housing crash in the 80s. Interest rates weren't exactly low... I can remember people paying 10% or higher on new mortages then.

 

[Mayfriday0529]

11.25% fixed or 10.45% variable?

 

[gsellis]

Get the fixed and refi when your credit score goes up and you complete getting loans. You can consolidate private loans, it is just harder. The one's we have looked at are LIBOR + 2-5% and 0-3% points on the best and some percentage slightly above for fixed.

BTW, that rate is pretty poor. PM me and tonight I will send you a link to a list of private loans that my wife found. I think they started at 7.x%.

If it is Wells Fargo, they suck. They just eliminated their web bill pay. They will only take a check by the mail or auto payment. They also will do everything possible to make sure that you do not get your payment in on time so they can charge you a late fee. And after all that rot, they then take 3 weeks to process your check after they receive it (on time). They also like to push that whole "no customer service" model and will illegally call you if they think you missed a payment (called at work and were told that they could not call that number, so they do anyway).

 

[Mayfriday0529]

Originally posted by: gsellis
Get the fixed and refi when your credit score goes up and you complete getting loans. You can consolidate private loans, it is just harder. The one's we have looked at are LIBOR + 2-5% and 0-3% points on the best and some percentage slightly above for fixed.

BTW, that rate is pretty poor. PM me and tonight I will send you a link to a list of private loans that my wife found. I think they started at 7.x%.

If it is Wells Fargo, they suck. They just eliminated their web bill pay. They will only take a check by the mail or auto payment. They also will do everything possible to make sure that you do not get your payment in on time so they can charge you a late fee. And after all that rot, they then take 3 weeks to process your check after they receive it (on time). They also like to push that whole "no customer service" model and will illegally call you if they think you missed a payment (called at work and were told that they could not call that number, so they do anyway).

Its Citibank. I don't know, this might be the best I can get? I have $18,000 in CC debt. $27,000 in Federal loans, The 31k in private student loans. Oh and I just leased a $30k Nissan about a week ago.

My credit is good when it comes to never miss payments, etc etc. Its just low because I owe too much and have high amount on the CC's.

 

[amdskip]

Hahhahaha, sorry but are you really that dumb? Why would you lease a new vehicle with all that debt, especially cc debt. The student loans are acceptable but something isn't adding up here.

 

[Mayfriday0529]

Originally posted by: amdskip
Hahhahaha, sorry but are you really that dumb? Why would you lease a new vehicle with all that debt, especially cc debt. The student loans are acceptable but something isn't adding up here.

I lease the car, but I don't actually make the payments for it. On Paper is mine though.

 

[randomlinh]

i'm sitting on a variable rate for my private loans, but it's a bit of a gamble right now. With the rates going down, I'm hoping the fixed rate drops below 10... yeah, I know.. wishful thinking. But I'm afraid of them skyrocketing in a few years

 

[Casawi]

Variable interest never goes down.

 

[gsellis]

Citibank's rate was pretty good, but there was at least one better, but not by much.

 

[DivideBYZero]

In debt to the tune of 106k and none of it is in a house? FAIL!

 

[Special K]

Originally posted by: Pale Rider

Originally posted by: Special K

Originally posted by: Pale Rider
Fixed. Always.

When the economy goes belly up (recession - it does this every few years, no one knows why, democrats and republicans blame each other) the rate will skyrocket and your payment may get to be unbearable. A moderate fixed rate with a payment you can afford is the way to go.

Wait - if we had a recession, wouldn't interest rates drop, which would make the variable rate loan cheaper?

Wouldn't inflation cause interest rates to rise since the government would be trying to keep people from spending money as fast?

Look at the housing crash in the 80s. Interest rates weren't exactly low... I can remember people paying 10% or higher on new mortages then.

Well I meant in general - isn't the purpose of increasing interest rates is to reduce spending, and the purpose of decreasing interest rates is to promote spending in a recession, such as what happened in the ~3 years following 9/11?

<- not an econ major, just curious

 

[FoBoT]

rates are going to have to go up after the election next year

 

[JS80]

If you expect rates to go down then a variable rate is better. If you expect rates to go up, then fixed is better. However, fixed rate is just the expected rate point of the next X years so most likely you will even out. If you're expecting rates to drop more than the market is expecting it to, then a variable rate loan is better.

 

[waggy]

I do not like the idea of my rates changing. So i never get a variable rate.

 

[Xavier434]

Always always fixed. The only point to variable and what it has to offer you is just a lure so that they can raise your rates later in time. Never do anything but fixed. The longer the time you have the loan, the much greater the chances are that the rate will go up.

 

[DBL]

Originally posted by: Xavier434
Always always fixed. The only point to variable and what it has to offer you is just a lure so that they can raise your rates later in time. Never do anything but fixed. The longer the time you have the loan, the much greater the chances are that the rate will go up.

WRT mortgages, this is not true. If you happen to know that you would be selling within a predefined number of years, it likely could make sense to take a variable rate and save the money in the short term.