When considering debt consolidation loans,
you’ll find two basic types of interest:
- Variable Rate Loans
- Fixed
Rate Loans.
The biggest difference is that payment amounts will vary
if you select a variable rate loan. That can be a good thing,
but can also be a problem. For example, if the interest rate
is high at the time of your loan, you may find your payment
falling as interest rates fall. But the reverse is also true.
In many cases, a person with a bad credit rating will qualify
for a loan with a variable rate because lenders are able to
keep interest rates in line with current rates, regardless
of where those rates go. Sometimes those loans include some
additional perks - early payoff with no penalty, for example.
It’s important to carefully evaluate your situation,
your ability to repay your loan, and your future goals before
you decide which interest rate plan is best.
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