Fixed-Rate vs. Variable-Rate: Finding the Right Loan Terms for You

When you need to take out a loan, whether it's a home loan, car loan or personal loan, you have a choice between fixed-rate and variable-rate terms. Both types of interest rates can be beneficial depending on many factors, including your current financial situation, your comfort level with fluctuating rates and your credit score. Learn more about your two options so you can make an informed decision.
 

Fixed-rate loans

Fixed-rate loans feature a set interest rate for the entire term of the loan. A fixed-rate loan is a great option for those who:

• Prefer consistent monthly payments
• Plan to pay the loan over a longer term
• Follow a personal budget and enjoy the predictability that a fixed rate allows
• Qualify for a low interest rate and want to secure it for their entire loan term
• Expect interest rates to increase, and want to lock in a lower interest rate now
   

Variable-rate loans

Unlike fixed-rate loans, variable-rate loans (sometimes called adjustable-rate loans) do not offer borrowers one steady interest rate over the life of the loan. The fluctuations of the interest rate are based on current market conditions and, in the case of CIBC loans, on the CIBC Prime lending rate.

Variable-rate loans are good for those who:

• Plan to keep the loan for only a short period of time
• Are confident that lower interest rates will become available down the road
   

Apply for a fixed- or variable-rate loan with CIBC

Carefully weigh your options when applying for a loan or line of credit. Every situation is unique, so you will be the best judge of the type of interest rate you're prepared to pay. If you're comfortable with the variability of an adjustable-rate loan, that may be the right solution for you. If not, a fixed-rate loan would probably be a better fit. Keep in mind that with either a fixed- or variable-rate loan, you can pay a portion of the loan or the entire loan without penalty. No matter which you choose, you can work with CIBC to find loans and lines of credit that fulfill your lending needs. Start your application online, visit a local CIBC branch or call 1-866-525-8622 to speak with a CIBC advisor.