Before taking a loan, it’s crucial to understand how the interest rate works. It can affect how much you pay — and how easy it is to plan your finances.
- Fixed interest rate: stays the same — your monthly payment never changes.
- Variable interest rate: can rise or fall — low today, higher tomorrow.
- Fixed rates = easier to plan your budget.
- Variable rates = possible savings, but also more risk.
- Example: fixed rate means paying ₦50,000 every month; variable rate means ₦45,000 one month, ₦60,000 the next.
- Banks can raise a variable rate — always read the fine print.
If you want stability, go with fixed rates. If you can handle ups and downs, variable might work — but be ready for surprises.