A fixed rate stays the same for the life of the loan. A variable rate is tied to a benchmark and can change, usually at set intervals and within a cap.
When variable works
If you expect to repay quickly, or the loan is a revolving line such as a home equity line of credit, a variable rate's lower starting point can save money. Check the periodic and lifetime caps before you commit.
When fixed is safer
Long, large loans are where an unexpected rate rise hurts most. If a higher payment would strain your budget, a fixed rate buys predictability, even at a slightly higher starting rate.
Ask about conversion
Some lenders let you lock all or part of a variable balance into a fixed rate later. That option can make a variable loan much less risky.
Put it into practice
Compare real offers by total cost, or test a payment first.
This guide is for general information and is not financial, legal or tax advice.