Variable or fixed rate loan - which one ?

[Lomond]

Hi

Im about to buy a second hand car and getting a loan (approx 10,000) to finance the bulk of this.

The bank has offered over 5years
variable rate = 8.3% APR and 4.1% interest (201.64 monthly).
fixed rate = 8.8% APR and 4.4% interest (204 monthly).

At some point in Aug of this year, I may wish to reduce my loan by paying a lump sum figure. My question is which type of loan is best to go for and will ECB rates factor into the decision ?

Are people staying away from variable loans ? and is there any significance in the fact that the variable and the fixed rate payments are much the same over the 5yrs ?

Any advice welcome, thanks

 

[CCOVICH]

Why not get a fixed rate loan with Tesco, which offers both competitive rates and the flexibility to make extra payments without penalty?

 

[Perplexed]

With most fixed rate loans there is a penalty for early repayment.

If you want to pay some of it off earlier then you'd probably be best to go for the flexible rate.

Read the T & C's of the loan offer or ask for an explanation.

I've no idea of the Tesco loan but whatever you go for always read the small print or ask questions to make sure you're happy with what you're signing.

 

[Lomond]

Why not get a fixed rate loan with Tesco, which offers both competitive rates and the flexibility to make extra payments without penalty?

Thanks for that , I checked the figures against my own bank and they look good. Have now applied online.

 

[bijou]

Thanks for that , I checked the figures against my own bank and they look good. Have now applied online.

Lomond
Just out of curiosity, did you apply for the tesco loan on line? and if so how long did the process take?
bijou