What is a Fixed Rate?

A fixed rate of interest is an interest calculation based on the amount of money borrowed and the period of the loan and will not change during the life of the agreement.

It is also referred to as `flat rate` of interest and is the most widely used and understood method of calculating interest. Click on the links to reveal more detail:

Annual Interest

A fixed interest rate is normally calculated on an annual basis and does not take into account any reduction in the capital amount that has been borrowed by the customer and that is being repaid every month.

A fixed rate of interest applies to the capital amount borrowed only (unlike the Annual Percentage Rate (APR) which reflects all interest and fees/charges to be paid by the customer).

Fixed Interest Repayments

The fixed rate of interest is calculated on the total amount borrowed and will not change during the life of the agreement, regardless of changes in the Bank of England base rate.

Regular payments that the customer makes to the finance company will remain the same throughout the term of the agreement. There will be no payment fluctuations for the customer, which helps planning.