Please ensure Javascript is enabled for purposes of website accessibility

This device is too small

If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.

Skip to main content

What Is a Fixed-Rate Personal Loan?

Dana George
By: Dana George

Our Loans Expert

Ashley Maready
Check IconFact Checked Ashley Maready
Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Although taking out a personal loan is easy enough, there are several important decisions you'll need to make. For example, you'll need to decide whether you want an unsecured loan or a secured loan, and you'll be expected to know whether you want a fixed interest rate or variable interest rate loan. Here, we'll break down the differences between fixed-rate and variable-rate loans so you'll be ready when the time comes.

What is a fixed interest rate?

A fixed interest rate is a rate that stays the same over the life of the loan. No matter what's going on with the economy, your interest rate never changes, so your loan payments stay the same each month. Most of the best personal loan lenders offer fixed-rate loans. If you're someone who appreciates stability and likes knowing what you can expect from month to month, a fixed interest rate may be the best option for you.

Let's say you've decided to make renovations to your home and need a personal loan to make it happen.. You're told that you have access to an adjustable-rate personal loan. You learn that the initial interest rate will be set in stone for a specific period of time, and that sounds good to you. However, once that period of time is up, the interest rate on the loan will periodically be adjusted. Depending on what's going on with the market, the interest rate can either be adjusted up or down. And that makes you nervous. You want to know for sure how much your loan rate and the monthly payment will be throughout the life of the loan. While an adjustable-rate loan might be perfect for a borrower who only plans to keep the loan for a short time, you're not confident that you'll be able to retire the loan before the final payment is due.

Note: Even if a borrower plans to come out on top by keeping an adjustable-rate loan for a short time, it only works if their lender does not charge an early payoff fee.

Instead, you opt for a fixed-rate loan. Your credit score is high, so you lock in a decent interest rate and feel good about the decision. You know exactly how much the annual percentage rate (APR) on the loan is going to be, are crystal clear as to how much your monthly loan payment will be, and have already come up with a repayment plan that will allow you to pay the loan balance off early.

While a fixed-rate loan is perfect for you, another borrower may feel better served by an adjustable-rate loan. Maybe they don't believe they'll carry the loan long enough to worry about paying a higher interest rate when the introductory rate expires. Perhaps they can easily afford the payment, even when rising interest rates lead to a higher monthly payment. To learn more about adjustable-rate loans -- and find out if they're right for you -- check out our guide to adjustable-rate personal loans.

Pros and cons of a fixed-rate loan

Here, we take a look at what's great (and not so great) about fixed-rate loans.


  • Interest rate stays the same
  • Monthly payment stays the same
  • Easier to budget each month
  • A fixed-interest rate loan may lead to fewer sleepless nights for nervous borrowers


  • If market interest rates drop while repaying your loan, you're stuck with the same higher rate

Should I get a fixed-rate personal loan?

A fixed-rate personal loan is your best bet if you don't like financial surprises and want a loan payment (and interest rate) that never goes up. Whether or not you should opt for a fixed-rate loan or variable-rate loan depends on how you feel about risk and whether you can afford a higher monthly payment if the interest rate rises.

Today's interest rates and fixed-rate loans

Deciding if you want a fixed-rate or adjustable-rate loan is made a little trickier today by higher average interest rates for personal loans than we've seen in a while. When market interest rates are high, borrowers sometimes opt for an adjustable-rate loan because those loans start with lower interest rates. However, those borrowers have zero control over which direction their monthly payments move.

And while we're on the topic of today's interest rates, take time to consider how a fixed-rate vs. variable-rate loan applies to other loan types. For example, when you purchase a home, a lender will want to know whether you want a fixed mortgage or a loan with a variable interest rate. The same rules apply:

  • Estimate how long you'll be in the home
  • Find out if a variable-rate loan begins with a significantly lower interest rate
  • Determine whether you can afford the mortgage payment, even if the mortgage rate increases
  • If you're uncomfortable with the idea of a floating interest rate and changing monthly payments, you can be confident that a fixed-rate mortgage is a better option.

Take your time to consider if a fixed-rate loan and its predictable payments are the right fit for you. If the answer is yes, you know precisely which loan type to request, even before filling out a loan application. And it pays to be ready. You never know when you'll need an emergency loan to cover a flooded basement or unexpected medical expenses.

The Ascent's best personal loans

Looking for a personal loan but don’t know where to start? Our favorites offer quick approval and rock-bottom interest rates. Check out our list to find the best loan for you.


  • You always know what your rate and payment are going to be throughout the life of the loan. There's no hoping it decreases or worrying that it will increase.

  • If rates fall while you're repaying the loan, you're stuck with the rate you signed up for.

  • Like most loans, you can refinance a personal loan. There will be fees involved in refinancing. However, it pays to put pencil to paper to figure out if the amount you'll save on payments each month will be enough to make up for the fees.

Our Loans Experts