Fixed vs Variable Rate Business Finance
Choosing between a fixed and a variable interest rate comes down to a trade-off: certainty versus flexibility. Neither is universally better — it depends on your cash flow and your view on rates.
Fixed rate vs Variable rate
Best for…
Fixed rate
- You want certainty for budgeting
- You expect rates to rise
- Tight margins where surprises hurt
- You don’t plan to repay early
Variable rate
- You want to make extra repayments
- You may pay the loan out early
- You expect rates to fall or hold
- You can absorb some movement
The verdict
If predictable repayments help you sleep at night and protect tight margins, fix the rate. If you want the freedom to overpay, repay early or benefit from falling rates, go variable. Some lenders even allow a split. We’ll show you fixed and variable options across our panel so you can decide with real numbers.
Common questions
If you repay or refinance a fixed loan early, the lender may charge a break fee to recover the interest they expected. The amount varies, so always check the terms before fixing.
With many lenders, yes — though terms and any fees vary. If you think you’ll want to fix later, tell us upfront and we’ll prioritise lenders that allow it.
Some lenders offer a split facility, giving you certainty on part of the balance and flexibility on the rest. We can compare lenders that support this.
For very short terms the difference is often small. Flexibility to repay early (variable) can be valuable if you expect to clear the loan quickly.
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