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The Problem with Fixed Rate of Interest on Payday Loans

Created: 2018-06-29 09:00:00

As you start receiving quotes for payday loans through Sure Money, you would come across two types of rate of interest or APR. There will be some fixed rates and some variable rates. It is difficult to predict how many fixed rates and variable rates you shall receive. This is entirely up to the lenders. Many borrowers think that a fixed rate of interest is better than variable rates. This is primarily because of the belief that a fixed rate would not change throughout the repayment term and that variable rates may get reviewed and effectively reduced. It is true that fixed rates don’t change and it can indeed be an advantage.

The only problem with fixed rate of interest is that there is no chance of having it reviewed and paying a lower rate later. This is not to imply that you can change variable rates of interest in your favor whenever you want but there is the possibility of some negotiation. Fixed rates don’t leave any room for such negotiation or review. It is quite possible you get quotes for payday loans with substantially higher rates of interest. If you choose to go ahead and sign up for one of them, then you would have to continue paying the higher rate for the entire term. There is absolutely no review.

Fixed rate of interest on payday loans make the repayment predictable. The installments are set and they don’t fluctuate. This is the singularly most beneficial reality of fixed rates. All you have to ensure is that you find the best rate available at the time of signing up for any type of short term loans. Many borrowers avoid all payday loans that have variable rates of interest. You would not be unwise to have such a preference as long as you successfully avoid the higher rates.