Flexible loans are loans that fit a person’s financial circumstance. While regular loans are paid on a fixed date and terms, and overpayments are charged with a certain fee. Flexible loans usually cater to those borrowers whose monthly salary differs. This type of loan has a fixed minimum which can be repaid by the borrower as is up to the full amount to close the said loan. This type of loan usually has a higher interest rate since the loan duration may not last its full contract had the borrower suddenly decided to pay the loan in full.
Another advantage for someone who has erratic monthly income is that borrowers can request a repayment holiday, in which payment is suspended short term but with continuously growing interest. Overall flexible loans are loans best suited for someone who has no fixed income, yet have the capacity to pay but not on a structured basis.
Fixed loans, on the other hand, are really not that different from their flexible counterparts. A fixed loan also has an exact interest rate, but which is actually lower than the one of a flexible loan and an exact date by which the monthly maturity should be paid thereof. But while a flexible loan could be paid in full at any time without the hassle of overpayment charges or suspended with running interest rates, a fixed loan has additional interest rates for overpayment and cannot be suspended. Another big difference is that a fixed loan cannot offer an additional amount to be taken out on the loan has been executed, it is a different story for a flexible loan.
A flexible loan can offer additional funds if the principal amount is not enough and the said additional amount will be bolted to the original loan amount with additional interest rates. There are some banks that even offer flexible loans over the internet for a maximum amount and only the amount that goes into that person’s account will be charged with interest and only the amount that has been taken will be charged to the borrower.
Basically, the difference of a fixed and flexible personal loan lies in the interest rate it can be said that both loans cater to two different sets of people structured specifically on the terms of payment or on how a person plans to repay his or her loan. On one hand a higher but steady interest rate but with a flexible timeframe in which repayment can be made and the other with a very strict time frame, with a basic, lower but erratic interest rate. It will generally be up to the borrower to choose based on that person’s age, income and credit rating.