Variable vs Fixed Interest Rate

Рет қаралды 16,129

4 жыл бұрын

Should you go with a fixed interest rate? Or a variable interest rate? Which one is better? If you've ever taken out a loan of any kind, you may have been presented with these options. In this video, I tell you about how both of them work, and which I recommend choosing based on your unique situation.
What do you think is better? Fixed or variable? Let me know in the comments.
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Пікірлер: 28

@MagnitudeMoney 4 жыл бұрын

If you have to borrow money, I think fixed rate is the way to go.

@PracticalPersonalFinance 4 жыл бұрын

Should be the only way! Enough of these lenders passing their risk along to consumers!

@JezelJordan Жыл бұрын

I went with a fixed rate mortgage in 2019 right before the pandemic, and interest rates have been raised so many times since then! I feel so fortunate

@ofircohen1675 4 жыл бұрын

Wow man... your videos are so great! No idea how you can manage to have a new one each day... Respect!

@PracticalPersonalFinance 4 жыл бұрын

Thank you Ofir!! It's certainly not easy, I'm trying to go for 30 days straight to see what the effect is on my channel. Excited for your next video!!

@ShalalatYT Жыл бұрын

Istg on my book this topic seemed too complex, but this video made it super easy to understand. I sooo love this vid!!! New subscriber here^^💚

@AlexRaePersonalFinance 4 жыл бұрын

This is a really clear, concise explanation! Well done. 😊

@PracticalPersonalFinance 4 жыл бұрын

Thank you Alex! Looking forward to your next video!

@leannaramotar5848 2 жыл бұрын

I really love the content of video 👏🏼 properly explained!

@kennychan263 6 ай бұрын

Out family went on with the three year fixed interest rate in 2020 4.20%. Following the inflationary period in 2022, the floating rate spike to 8.60%. We are happy that the fixed rate help us to protect long-term risk.

@jigglerish 2 жыл бұрын

Good content. Thanks for explaining the concept in simple and easy to understand content

@almadden 2 жыл бұрын

Thanks Andrew great when someone cuts all th bull & explains it in simple terms . Knew asking the bank was no good they would never tell me the truth as you say they are just there to make as much money off us as possible .

@PracticalPersonalFinance 2 жыл бұрын

My pleasure Al and thank you for watching and being a subscriber!!

@tunasiabol6961 2 жыл бұрын

Fixed all day 🤣 thanks for info!

@PracticalPersonalFinance 2 жыл бұрын

Any time!

@SpencerGatten 4 жыл бұрын

literally had this conversation with a client today! I personally go with variable more often than not so the penalties are lower if i move investments or want to liquidate

@PracticalPersonalFinance 4 жыл бұрын

Sounds risky! Are you only using the ARM if it's for something short term?

@SpencerGatten 4 жыл бұрын

@@PracticalPersonalFinance The ontario market is appreciating at a high pace along with me generally doping BRRR strategy so to avoid penalties on a refinance or sale I have to do variable so yes shorter term

@PracticalPersonalFinance 4 жыл бұрын

Very interesting! You should make a video on when it's advantageous to use a variable rate! I know you've done one on the BRRR strategy, but maybe one just about rates in general!

@GmanGavin1 Жыл бұрын

🤔 With something like a credit card at like 26% I can figure out the interest, but when paying a fixed rate it feels very random. Chase credit card at 25%, $100 remaining I can expect $100*(.25/12) About $102 next bill. An Auto-loan fixed at 7.5% I can make a payment of $400 and $150 goes towards interest. 37.5% of the payment. But it's not even that simple, it can go up to $200 one month and down to $60 another.

@PracticalPersonalFinance Жыл бұрын

Hey Gavin thanks for watching! Sounds like an interesting situation you’ve got. With a fixed interest rate on an auto loan, the amount of interest you pay each month should be roughly the same, though overall it will decrease slowly over time as the balance on the loan is decreased. The interest might go up very slightly from one month to the next because some months have a day or two more than others, but not as much as you’ve described. My best guess, without knowing more, is that you made your payment early one month (the month with $60 interest) and because of the early payment, interest didn’t accrue as much as usual. Then, the following month, you made your payment on the regular schedule. Because there was more than the usual ~30 days between payments, the interest (which is technically calculated, but not compounded, daily) was a larger portion of the following payment.