<p></p><table><tr><th><p>Status</p></th><th><p>Description</p></th></tr><tr><td><p><b>PENDING</b></p></td><td><p>Order has not yet been successfully listed </p></td></tr><tr><td><p><b>LISTED</b></p></td><td><p>Order is successfully listed and can be viewed by other investors</p></td></tr><tr><td><p><b>CONFIRMED</b></p></td><td><p>Order has been successfully bought or sold but has not yet settled </p></td></tr><tr><td><p><b>EXECUTED</b></p></td><td><p>Order has been successfully completed and settled</p></td></tr><tr><td><p><b>EXECUTION_FAILED</b></p></td><td><p>Order was not successfully completed</p></td></tr><tr><td><p><b>CANCELED</b></p></td><td><p>Order has been canceled</p></td></tr><tr><td><p><b>REJECTED</b></p></td><td><p>Order has been rejected</p></td></tr></table><p></p>

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Timing matters when refinancing an auto loan. So before opting for a new loan, make sure you understand when it’s a good idea to refinance and when it’s better to wait. 

<p><a href="https://www.lendingclub.com/auto-refinancing"><b>Refinancing your auto loan</b></a> can help you get a lower interest rate or change the loan term, which could save you money on interest, lower your monthly payments—or potentially both. If you only recently bought your car, or you’ve had it for several years, you might be wondering if it’s too soon, too late, or the perfect time to refinance.  </p><h2>When to refinance your car loan </h2><p>Timing can be a huge factor when considering an auto loan refinance. Many lenders have required waiting periods before you can refinance or cut off periods when it’s too late. Let’s take a closer look at some of the timing restrictions lenders may have around refinancing.  </p><h3>The first 60 to 90 days of the car loan </h3><p>Most lenders require that you’ve had the loan for at least a few months before you can apply to refinance. At LendingClub Bank, for example, the minimum requirement is 90 days. This allows time for the car title to transfer from the manufacturer or previous owner to your current lender. The new lender also wants to see if you’ve been making on-time payments for the first few months. </p><h3>At least 24 months remaining on the car loan </h3><p>If you’re considering refinancing, you’ll want to act while there’s still some time left on your loan because many lenders have a minimum requirement. For instance, LendingClub Bank requires at least 24 months remaining on the original loan term. Plus, the later in the term you are, the more interest you’ve already paid off—which means it could be more cost-effective to simply stick with your original loan and finish off the principal. </p><h2>7 signs it’s a good idea to refinance your car </h2><p>There are more telltale signs refinancing your car loan is a good option for you. Consider these common situations when it may make sense to try to refinance your auto loan. </p><h3>1. Your credit score has increased </h3><p>If you’ve been paying your debts on time, your credit utilization has decreased, or you’ve made other moves to improve your credit score, you may be able to qualify for a lower rate than you received when you first bought the car. Even a small reduction can meaningfully impact your total interest and monthly payments. When you applied for the original loan, the lender likely did a hard inquiry on your credit report. Waiting a few extra months can give your score time to recover, which may help you get a better interest rate.<sup>[1]</sup> </p><h3>2. Interest rates have dropped since you purchased your vehicle </h3><p>If prevailing interest rates were higher when you first took out your loan, it might be worth checking whether you can lower your rate. Many lenders allow you to check your potential rate without doing a hard credit check, so you can see your savings without impacting your credit score.<sup>[1]</sup> </p><h3>3. You want a lower monthly payment </h3><p>Refinancing isn’t just about potentially saving money—you can also refinance to put more room in your budget. Lengthening your term may increase your overall interest costs, but it also reduces your monthly payment. If bills are tight, refinancing to lower your payments may be the solution you’re looking for.<sup>[2]</sup> </p><h3>4. You financed your current auto loan with a dealership </h3><p>Dealer-financed auto loans are often not the best deal. Because dealers act as a go-between for shoppers and the bank, they tend to mark up the interest rate to get a cut. By refinancing directly with an online lender, credit union, or other financial institution, you’re avoiding that markup, which can save you money.  </p><h3>5. You want to pay off your auto loan sooner </h3><p>Can you swing a higher monthly payment? If so, you may be able to refinance into a loan with a shorter term. Not only will you pay off your loan more quickly, but you could also save on overall interest.<sup>[2]</sup> </p><h3>6. You want to remove a co-signer </h3><p>Maybe you needed a co-signer to qualify for your original loan, but you’ve established or improved your credit since then. If so, you can try to remove your co-signer by refinancing into a loan of your own.<sup>[1]</sup>  </p><h3>7. You need extra cash </h3><p>Some lenders offer a cash-out refinance option, which means you can take out a loan for more than the value of your car and keep the difference in cash. </p><h2>5 signs you shouldn’t refinance your auto loan </h2><p>Auto refinancing can make a lot of sense for some people—but before choosing to refinance, it’s important to make sure the timing is right. Here’s a closer look at some common situations when you may want to hold off on refinancing your loan.  </p><h3>1. The interest rate is higher than your current loan </h3><p>If your credit score has gone down or rates have gone up since you first took out the loan, you could end up with a higher interest rate through refinancing. That might be okay if your goal is to get a longer term and lower monthly payments. However, it’s important to do the math first to make sure the trade-off is worth it. </p><h3>2. You owe more than the value of your car </h3><p>Depending on how far along you are into repaying your loan and other factors, like depreciation or missed payments, you may owe more on your current loan than the vehicle is worth. This situation leaves you “underwater” or “upside down” on the loan. Most lenders won’t refinance this type of loan. If they do, the rate and terms will likely be unfavorable. Before applying for a refi, check your car’s value compared to your loan payoff amount to see where you stand.<sup>[3]</sup>  </p><h3>3. You waited too long to refinance your auto loan </h3><p>Lenders typically require borrowers to have at least two years left on the loan in order to qualify for refinancing. Additionally, it can be tough to refinance a car that’s over 10 years old or with 140,000 (or more) miles on it.  </p><h3>4. Your current auto loan has a prepayment penalty </h3><p>Paying off your current loan early could cost you a prepayment penalty fee, often charged as a percentage of your outstanding loan balance. Be sure to read the disclosures and fine print to understand whether your existing loan is subject to any prepayment fees and how much they’ll cost. Then, weigh the fee against the potential savings you’ll get with a new loan to see if it makes sense financially.<sup>[2]</sup>  </p><h3>5. You don’t want your credit score affected </h3><p>Refinancing an auto loan typically results in a hard credit inquiry from the lender, which can cause your score to drop. The dip is usually only a few points, and it’s temporary. However, if you’re in the middle of applying for a mortgage or other credit, it’s probably a good idea to hold off on refinancing your auto loan. <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>Learn more about soft vs. hard credit inquiries</b></a>.<sup>[4]</sup>  </p><h2>Is refinancing worth it?  </h2><p>Refinancing may be worth it, depending on your financial goals and situation. Before deciding to refinance your auto loans, it’s important to carefully consider your credit situation, interest rates, and your motivation for refinancing. The timing may not always be right, and in some cases it may not even be possible to refinance due to lender restrictions.   </p><p>How to get started refinancing your auto loan If you’re thinking of refinancing your auto loan, you can start the <a href="https://www.lendingclub.com/resource-center/auto-refinance/how-does-refinancing-a-car-work"><b>refinancing process</b></a> by reviewing the details of your current auto loan, including your outstanding loan balance, annual percentage rate (APR), and time left on the loan term. Next, check your credit to make sure it’s in good shape. If it needs improvement, then take steps to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score"><b>improve your score</b></a>.   </p><p>Check with lenders to see what kind of interest rate and terms you can qualify for. Many lenders, including LendingClub Bank, will show you a potential rate without doing a hard credit inquiry. When it comes to actually applying for loans, submit all your applications within a span of a couple of weeks to minimize the impact to your credit score.<sup>[1]</sup>  </p><h2>The bottom line </h2><p>Whether you want to pay off your vehicle faster, have smaller monthly payments, or save on interest, auto loan refinancing can be a powerful personal finance strategy that can be tailored to your unique financial situation. However, it’s important to carefully consider a wide range of factors to determine if the timing makes sense to refinance your auto loan.     </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-should-i-know-before-i-shop-for-auto-loan-at-a-bank-credit-union-dealership-or-other-lender-en-755/#will-my-credit-impact-my-interest-rate">Consumer Financial Protection Bureau</a>. “What should I know before I shop for a car or auto loan?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/can-i-prepay-my-loan-at-any-time-without-penalty-en-843/">Consumer Financial Protection Bureau</a>. “Can I prepay my loan at any time without penalty?” </p></li><li><p><a href="https://consumer.ftc.gov/articles/auto-trade-ins-and-negative-equity-when-you-owe-more-your-car-worth">Federal Trade Commission Consumer Advice</a>. “Auto Trade-Ins and Negative Equity: When You Owe More than Your Car is Worth” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/whats-a-credit-inquiry-en-1317/#:~:text=Hard%20inquiries,frequently%20you%20apply%20for%20credit.">Consumer Financial Protection Bureau</a>. “What’s a credit inquiry? </p></li></ol><p></p>

A personal loan and credit card can be important financial tools, but it's important to understand how they each work before deciding which one to use. 

<p>When deciding between a <a href="https://www.lendingclub.com/personal-loan"><b>personal loan</b></a> or a credit card, it’s important to weigh their key differences, how you plan to use the funds, and your personal financial situation. A credit card may make sense for smaller purchases, like groceries, gas, or your morning coffee. As long as you’re confident you can pay off the total balance at the end of the month, using a credit card can be a good option. </p><p>However, if you’re looking to finance a larger purchase, like a home remodeling project, a personal loan can help you access the funds you need with a fixed interest rate and repayment plan.<sup>[1][2]</sup> </p><h2>Differences between personal loans and credit cards </h2><p>A personal loan is a lump sum of money that’s paid back over a predetermined period of time, while credit cards offer a line of credit that accrues a balance and requires a monthly minimum repayment. Here’s a closer look at how personal loans and credit cards compare.<sup>[1][2]</sup> </p><h3>At a glance: The differences between personal loans and credit cards</h3><table><tr><th><p></p></th><th><p><b>Personal Loan</b></p></th><th><p><b>Credit Card</b></p></th></tr><tr><td><p><b>What is it:</b></p></td><td><p>A lump sum of money that’s repaid in monthly installments over a set period of time with interest  </p></td><td><p>Payment card used for charges against a revolving line of credit with accruing balances that’s repaid with a minimum monthly payment </p></td></tr><tr><td><p><b>When to use:</b></p></td><td><p>Consolidate high-interest debt or pay for one-time major expenses like weddings, vacations, or home improvements </p></td><td><p>Cover day-to-day expenses or unexpected needs without cash or checks </p></td></tr><tr><td><p><b>Best for...</b></p></td><td><p>Access to quick funds with fixed interest rates and predictable monthly payments </p></td><td><p>Access to revolving credit for small purchases or emergencies </p></td></tr><tr><td><p><b>Interest rate type</b> </p></td><td><p>Fixed rate for life of the loan </p></td><td><p>Variable rate on unpaid balance </p></td></tr><tr><td><p><b>Repayment type</b> </p></td><td><p>Fixed monthly installment </p></td><td><p>Monthly payment based on current balance  </p></td></tr><tr><td><p><b>Advantages</b> </p></td><td><p>Larger borrowing limits; lower interest rates than most credit cards; predictable repayment plan; can help build and improve credit </p></td><td><p>Convenience; no interest due if total monthly balance paid in full; earn rewards or cash back on purchases </p></td></tr><tr><td><p><b>Disadvantages</b> </p></td><td><p>Loan repayment starts immediately; some lenders may require an origination fee or prepayment penalty </p></td><td><p>High, variable interest rates; credit limits can vary; potential for high-cost debt to accumulate quickly; possible annual and late fees; can quickly damage credit if used irresponsibly  </p></td></tr></table><h2>Personal loans </h2><p>A <a href="https://www.lendingclub.com/resource-center/personal-loan/guide-to-choosing-the-best-personal-loans"><b>personal loan is a lump sum of money</b></a> you can borrow for almost any purpose, such as <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-consolidation"><b>consolidating credit card or other debt</b></a>, paying moving costs, or making home improvements. With a personal loan, your interest rate is typically fixed and lower than most credit card interest rates, and you’ll have a set amount of time to pay the loan back. </p><p>Personal loans can be an effective financing choice in many situations—including those that involve larger cash sums that you want to pay off over time.<sup>[1][2]</sup> Here are some common reasons to choose a personal loan:  </p><ul><li><p><b>You want to consolidate credit card debt.</b> Credit cards tend to charge higher interest rates compared to other borrowing options. Using a personal loan to pay off higher-interest debt lets you fold multiple payments into one manageable payment with a more favorable interest rate and term, which can save you money.<sup>[3]</sup> </p></li><li><p><b>You need a large amount of money.</b> Generally, a personal loan gives you flexible access to more cash than a credit card does, without the drawback of racking up high interest on large purchases that can’t be paid off within a month or two. With a fixed and typically lower interest rate, personal loans can be used to make major purchases, handle big expenses, or fund important goals. </p></li><li><p><b>You prefer more control over your cash. </b>Personal loans offer added flexibility when it comes to accessing and disbursing your money. Because funds are usually deposited directly into your bank account within days, you can decide when and how to fill a short-term cash need for an emergency or invest in a big purchase, managing your priorities as necessary. </p></li></ul><h3>Personal loan pros and cons </h3><p>Before taking out a personal loan, it’s important to weigh the pros and cons. Here’s a breakdown of some of the key advantages and disadvantages of using a personal loan.<sup>[1]</sup>    </p><p><b>Pros: </b></p><ul><li><p>Large borrowing limits </p></li><li><p>Lower interest rate than most credit cards </p></li><li><p>Predictable repayment plan with fixed interest rate and monthly payment amount </p></li><li><p>Swift application and disbursement of funds </p></li><li><p>Positively impacts credit score with on-time payments </p></li></ul><p><b>Cons: </b></p><ul><li><p>Loan repayment starts immediately </p></li><li><p>Required, fixed payments with interest </p></li><li><p>People with less-than-perfect credit may not qualify for the best rates or terms </p></li><li><p>Possible <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-a-personal-loan-origination-fee"><b>origination fee</b></a>, prepayment penalty, or late fees </p></li><li><p>While not common, collateral may be required for secured loans </p></li></ul><h3>Who a personal loan is best for  </h3><p>A <a href="https://www.lendingclub.com/resource-center/personal-loan/how-do-loans-work"><b>personal loan</b></a> is best for people looking to borrow a large sum of money and pay it back over time. Consider a personal loan if you need to consolidate other debt, like high-interest credit cards, into one easy-to-manage monthly payment—often with a lower interest rate. A personal loan might also be best if you need to finance a large, one-time expense like a wedding, dream vacation, or home repairs.<sup>[1] [3]</sup>   </p><p>Personal loans must be paid back with fixed monthly installments, so they’re a good option if you like to plan your monthly expenses upfront. People with excellent credit generally qualify for the best rates, highest loan amounts, and most flexible repayment terms. So personal loans may be a good choice if your credit is excellent. If you’re working on rebuilding your credit, consider waiting to apply until your credit improves—or ask a creditworthy family member or friend to be a co-borrower.<sup>[1]</sup>   </p><h2>Credit cards </h2><p>Credit cards are convenient financial tools for most people—in fact, <a href="https://www.federalreserve.gov/publications/files/2023-report-economic-well-being-us-households-202405.pdf"><b>according to the Federal </b></a><a href="https://www.federalreserve.gov/publications/files/2023-report-economic-well-being-us-households-202405.pdf"><b>Reserve</b></a>, 82% of us have at least one. While credit cards can help pay everyday expenses, finance purchases, and build credit history, those perks can come with costs—especially if you struggle to manage credit wisely. When compared to personal loans, credit cards are more often used for smaller purchases and come with higher interest rates.   </p><h3>Common reasons to choose a credit card include:   </h3><ul><li><p><b>You want a reliable way to pay for important purchases.</b> When you pay for something with a credit card, you&#39;re often protected against damage, theft, or loss of the item for as long as 90 to 120 days after the purchase. Known as <a href="https://www.experian.com/blogs/ask-experian/what-is-credit-card-purchase-protection/"><b>purchase protection</b></a>, this credit card benefit is kind of like short-term insurance for products you buy. </p></li><li><p><b>You want to take advantage of rewards programs.</b> Many of the best credit cards offer perks like cash back, discounts, points, or miles on all purchases, letting you maximize rewards and save money simply by paying with your card. For example, you could use a card that offers the best grocery bonuses to do all your food shopping, earning free cash for regular purchases.<sup>[4]</sup>  </p></li><li><p><b>You want a backup plan.</b> Credit cards give you the option to safely pay without cash, checks, or debit cards. And having a card on hand can give you peace of mind should you need it—even if you reserve it purely for emergencies.    </p></li></ul><h3>Pros and cons of credit cards </h3><p>Before using a credit card, it’s important to understand the pros and cons. Here are some key advantages and disadvantages of using credit cards.   </p><p><b>Pros: </b></p><ul><li><p>Purchase and fraud protection </p></li><li><p>Widely accepted form of payment  </p></li><li><p>No interest when monthly balance is paid in full </p></li><li><p>Options for rewards, discounts, or cash back on purchases </p></li><li><p>Responsible use can build positive credit history </p></li></ul><p><b>Cons: </b></p><ul><li><p>Credit limits and interest rates can vary </p></li><li><p>Possible annual fees and late fees </p></li><li><p>Research needed to choose the best credit cards </p></li><li><p>Potential for high-cost credit card debt to accumulate </p></li><li><p>Credit score damage if used irresponsibly </p></li></ul><h3>Who a credit card is best for </h3><p>Credit cards are a good option for people looking for a convenient, secure way to pay for everyday purchases. Consider a credit card if you need to make several smaller purchases. Credit cards are also handy in an emergency if you need to cover unexpected expenses like car repairs, broken appliances, or medical costs.   </p><p>A credit card may also be a good choice if you want to earn rewards for your spending on everyday purchases like gas, dining, or groceries. To avoid <a href="https://www.lendingclub.com/resource-center/personal-loan/apr-vs-interest-rate-whats-the-difference"><b>paying interest</b></a>, credit cards are best for people who don’t carry a balance from month to month. People building (or rebuilding) credit may also benefit from using a credit card, but only when used responsibly.<sup>[2][4]</sup> </p><h2>Do personal loans and credit cards affect your credit score differently? </h2><p>When you apply for a personal loan or credit card, the lender will perform a hard inquiry into your credit history. This usually makes your credit score drop by a few points. However, the effect is temporary and your score typically bounces back in just a few months.<sup>[5]</sup>   </p><p>Once you have a personal loan or credit card, be sure to pay your bills on time. Your payment history is reported to the credit bureaus and plays a major role in <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-score"><b>determining your credit score</b></a>. A positive payment history can help keep your credit on track, and even help boost your score, while a negative payment history can cause your score to drop. Defaulting on your loan or failing to pay a credit card could have serious consequences that affect your score for up to seven years.<sup>[6]</sup>   </p><p>Using a credit card responsibly can also help give your score a boost, but it’s important to keep an eye on your credit utilization. Keeping your card balance under 30% of its credit limit typically keeps your credit healthy. In other words, don’t max out your cards, and pay your balance in full each month if you’re able to.<sup>[6]</sup>   </p><h2>The bottom line </h2><p>There’s a lot to think about when you’re evaluating pros and cons of a personal loan versus a credit card. Before you choose, you’ll want to consider how much money you need and how quickly you can pay it off. Then compare interest rates and fees, and weigh the overall cost of each borrowing option. </p><p>Research credit cards that meet your needs, or compare online lenders for the most competitively priced personal loan you can afford. To avoid an initial hit to your credit, look for lenders like LendingClub Bank that let you check your rate with just a soft credit pull. </p><p></p><hr/><ol><li><p> <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-personal-installment-loan-en-2114/">Consumer Financial Protection Bureau</a>. “What is a personal installment loan?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/how-does-my-credit-card-company-calculate-the-amount-of-interest-i-owe-en-51/">Consumer Financial Protection Bureau</a>. “How does my credit card company calculate the amount of interest I owe?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/">Consumer Financial Protection Bureau</a>. “What is the difference between credit counseling and debt settlement, debt consolidation, or credit repair?” </p></li><li><p><a href="https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-credit-card-rewards/">Consumer Financial Protection Bureau</a>. “Credit Card Rewards” </p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/hard-inquiry-vs-soft-inquiry/#:~:text=Hard%20inquiries%20can%20impact%20your,for%20less%20than%20a%20year.">Experian</a>. “What’s the Difference Between a Hard and Soft Inquiry?”  </p></li><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">myFICO</a>. “What&#39;s in my FICO Scores?”  </p></li></ol><p></p>

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any accumulated interest. Due to the interest-on-interest effect, compound interest grows faster over time.

<p>Whether you’re saving or borrowing money, you should understand the difference between simple interest and compound interest. Why? Because these rates are commonly used for loans, credit cards, and savings accounts—but they’re calculated differently. In other words, it impacts how much you’re paying (or earning). </p><h2><b>What is simple interest?</b> </h2><p>Simple interest is the interest calculated on the principal amount of a loan. </br> </br>For example, if you open a $10,000 certificate of deposit (CD) with a 3% interest rate and simple interest, the CD will accrue $300 of interest every year ($10,000 x 3% = $300). If it has a three-year term, you’ll earn $900 of interest overall. </br> </br>With a loan, the simple interest can determine how much you’ll pay. However, the total amount can be a little difficult to calculate because your principal balance will decrease as you repay the loan. </p><h3><b>How to calculate simple interest</b> </h3><p>Simple interest depends on the principal balance, interest rate, and time period. Here is the simple interest formula: <i>I = P*r*t</i> </p><ul><li><p>I is the total interest amount </p></li><li><p>P is the principal balance </p></li><li><p>r is the interest rate </p></li><li><p>t is the time period </p></li></ul><p>You want to use the same timeframe for the inputs to ensure you get the correct results. For example, if interest is charged daily, use the daily interest rate for (r) and a single day for (t) to determine how much interest accrues each day. If you want to figure out how much interest you’ll pay each year, use the annual interest rate and one year as the time. You can often review a loan agreement or statement to find the loan’s interest rate. </p><p>It may be shown as the annual rate, but the loan agreement could explain how a daily rate is determined. Often, the annual interest rate will be divided by either 360 or 365 to determine the daily interest rate. </p><h2><b>What is compound interest?</b> </h2><p>Compound interest applies the interest rate to both the principal balance and accrued interest. In other words, it charges interest on interest. With a loan, compound interest can lead to paying more interest over time. For example, a credit card may use daily compounding interest if you’re carrying a balance. </p><p>Each day, interest is calculated based on your current total owed and your card’s daily interest rate and then. added to your balance. On the following day, interest is calculated again on your new balance, and the cycle continues. With savings, compound interest can be a good tool to build wealth over time. Because you can earn interest on your interest, your account may grow more quickly. </p><p>Checking and savings accounts often show you the account’s annual percentage yield (APY), which includes compounding interest in the calculation. </p><h3><b>How to calculate compound interest</b> </h3><p>Calculating compound interest can be tricky because there’s an additional variable. That is the frequency of compounding. We’ll use an example to explain this concept below. This is the compound interest formula: <i>A = P (1 + r/n)nt</i> </p><ul><li><p>A is the total amount </p></li><li><p>P is the principal balance </p></li><li><p>r is the annual interest rate </p></li><li><p>n is how often interest compounds per year </p></li><li><p>t the number of years </p></li></ul><p>If you only want to find the total accumulated interest, you could use: </br> </br><i>I = P (1 + r/n)nt - P</i> </br> </br>For example, let’s say you take out the same $10,000 CD with a 3% interest rate and three-year term. But this time, the interest compounds monthly. </p><p>A = 10,000 (1+.03/12)(12*3) = $10,940.51 </p><p>You earned $940.51 in interest—an additional $40.51 compared to the simple interest CD—because you earned interest on your interest. </p><p>The frequency of compounding can also be important, as you’d earn more if interest compounded daily, but less if it compounded annually. You can find out how frequently interest is compounded for your account by reviewing your terms. </p><h2><b>Simple interest vs. compound interest loans</b> </h2><p>Compound interest is often best when you’re saving money because you’ll earn interest on interest. If you’re taking out a loan, a simple interest loan may be the better option since it could lead to less costs overall. </p><p>However, even with a simple interest loan, there are situations when your outstanding interest could be “capitalized,” or added to the principal. For example, this could happen when certain federal student loans leave deferment or forbearance. The interest rate would then apply to the new, larger principal balance. </br> </br>Remember, it’s important to look beyond the interest methods and consider the rest of the loan terms, such as the fees and repayment terms. If you have a tight budget, it might make sense to go with an option that has a lower monthly payment, even if it results in paying more interest overall. </p><h2><b>How simple interest personal loans could save you money</b> </h2><p>Assuming all other loan terms are the same, a loan that uses simple interest could have lower monthly payments and cost you less overall than a loan using compound interest. </p><p>You may be able to save additional money by making extra payments. By paying down part of your principal early, you can decrease how much interest accrues on your loan, With a fully amortized loan, your monthly payment amount might not change because you have a fixed repayment schedule—but making early payments could lead to paying off the loan early or having a lower final payment. </p><p>Saving money by making extra payments can work with both simple and compound-interest loans, but it’s not true of loans that use precomputed interest. With precomputed interest, the lender calculates and adds the interest to your loan. </p><h2><b>The bottom line</b> </h2><p>Loans and deposit accounts may use simple or compound interest to determine how interest accumulates. When an account uses simple interest, the interest rate only applies to the principal balance. But compound interest gets applied to the principal balance and accumulated interest. </p><p>Over time, an account that uses compound interest can lead to paying (or earning) more interest than one that uses simple interest. However, interest is only one factor when opening a new account. You may also want to review the accounts’ other features, terms, and fees to determine which is best. </p><h2><b>Compound interest vs simple interest FAQ</b></h2><h3><b>1. Is it better to open a compound interest or simple interest account?</b> </h3><p>You should review the terms of any saving or borrowing product carefully to make sure you’re getting the best deal. That being said, the cost of borrowing may be lower with a simple interest rate loan than with a loan that uses compound interest. Conversely, if you’re saving money, a checking or savings account with compound interest may grow more quickly than one with simple interest. Keep in mind, there are other factors to consider beyond interest when opening a new account. </p><h3><b>2. How do simple-interest personal loans compare to compound-interest loans?</b> </h3><p>Simple-interest loans may accrue less interest over time than loans using compound interest. With simple interest loans, you don’t pay interest on top of the interest that’s already accrued. However, there are unique situations when interest is capitalized and added to the loan’s principal—like when certain federal student loans leave deferment or forbearance. </p><h3><b>3. Can simple interest be used for car loans?</b> </h3><p><a href="https://www.lendingclub.com/auto-refinancing">Auto loan lenders</a> may offer you an auto loan with simple interest, but that depends on the lender. Review the terms of your loan offers to see how interest would be calculated on your car loan. </p><h3><b>4. Do banks offer simple interest loans?</b> </h3><p>You can find simple interest loans from both banks and online lenders. If you’re not sure what the lender uses, ask a representative or review the loan offer. </p><h3><b>5. How does LendingClub Bank calculate personal loan interest?</b> </h3><p>LendingClub Bank offers unsecured <a href="/personal-loan">personal loans</a> that are fully amortized and have fixed interest rates. We charge simple interest, and there’s no prepayment penalty for borrowers who want to save money by paying off their loans early. </p>

Debt-to-income ratio measures your monthly debt payments against your income. Improve it by paying down debts, increasing income, or avoiding new debt.

<p>Your debt-to-income ratio (DTI) is a comparison of your income to your current debt load and it plays a big factor in how lenders determine your borrowing risk. </p><p>When you apply for a personal loan or line of credit, lenders look at more than just your credit history and credit scores. They also want to know how much debt you’re carrying—and if you can comfortably afford to take on more. That’s where your debt-to-income ratio comes in. </p><h2><b>What is debt-to-income ratio?</b> </h2><p>Your debt-to-income ratio compares your debt payments to your monthly gross income or how much you earn each month before taxes and other deductions. Your DTI ratio gives lenders a clearer picture of your current debt and income, and is used to determine how much money you can afford to borrow responsibly. </p><p><b>Examples of debt that lenders will consider: </b></p><ul><li><p>Minimum credit card payments </p></li><li><p>Loan payments (such as <a href="https://www.lendingclub.com/auto-refinancing">car payments</a>, student loan payments, <a href="https://www.lendingclub.com/personal-loan">personal loans</a>, and other loan payments) </p></li><li><p>Monthly alimony or child support payments </p></li><li><p>Rent payment or mortgage payments </p></li><li><p>Other debts included in your credit report </p></li></ul><p><b>Examples of debt lenders don’t consider: </b></p><ul><li><p>Utilities like gas and electricity </p></li><li><p>Cable bills </p></li><li><p>Phone bills </p></li><li><p>Health insurance costs </p></li><li><p>Groceries </p></li><li><p>Entertainment and other variable expenses </p></li></ul><p>Lenders typically divide your DTI ratio into two components: front-end DTI and back-end DTI. </p><p><b>Front-end DTI</b> </p><p>Also known as a housing ratio, your front-end ratio includes housing expenses such as monthly mortgage payments, property taxes, monthly homeowner’s association dues, and homeowner’s insurance. </p><p><b>Back-end DTI</b> </p><p>Your back-end ratio includes your front-end DTI plus all your other monthly DTI debt (credit card bills, car loan, etc.) While both are important, most lenders focus on your back-end DTI because it presents the most accurate account of your recurring monthly costs. </br> </br>Remember, it&#39;s essential to be as accurate as possible when reporting your income to lenders. And don’t forget to include any income from bonuses or overtime pay. Most lenders verify income during the <a href="https://www.lendingclub.com/resource-center/personal-loan/steps-to-how-to-take-out-a-personal-loan"><u>loan application process</u></a>, so if your numbers differ from theirs, it can delay the process or cause your loan application to be declined. </p><h2><b>Why is DTI ratio important?</b> </h2><p>Along with your credit history and credit score, DTI is one of the most critical measurements of your creditworthiness in the eyes of lenders. It helps them determine how responsible you are with your debt. Having a good DTI ratio matters for a few key reasons: </p><h3><b>1. It can help with home buying.</b> </h3><p>Your DTI has a significant impact on your ability to take out a home loan. <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/">A DTI of 43%</a> </br>is typically the highest ratio one can have to qualify for a mortgage, but mortgage lenders generally prefer that borrowers have a DTI of 36% or less. </p><h3><b>2. It can help determine your approval for a personal loan.</b> </h3><p>When it comes to personal loans, lenders often look for borrowers with a DTI no higher than 40%. However, sometimes exceptions are made for borrowers with a higher DTI but generally good credit. </p><h3><b>3. It can help you qualify for better interest rates.</b> </h3><p>If you’ve lowered your DTI since you last took out a loan, such as a personal or auto loan, you may be able to qualify for a lower interest rate through refinancing. </p><h3><b>4. It provides a snapshot of your overall financial health.</b> </h3><p>If your DTI ratio is below 36%, it’s a pretty good indicator that you can take on and manage new debt responsibly. If your DTI is over 43%—and particularly if it’s over 50%—you’ll likely need to pay down some debt or find other sources of income before lenders will approve you for a mortgage or personal loan. </p><h3><b>5. It works in tandem with your credit score.</b> </h3><p>Though your DTI does not directly impact your credit score, it is closely associated with your credit utilization. If your DTI and credit utilization ratios are both low, you’ll have a better chance of being approved for loans. </br> </br><b>Keep in mind: </b>most lenders do not advertise maximum debt-to-income ratios, but instead provide guidelines that offer some flexibility. For example, a common guideline is the 28/36 rule used by some lenders to assess borrowing capacity. According to this rule, a household should only spend 27% of its gross monthly income on housing expenses, and no more than 36% on debt expenses—like car payments and credit cards. </p><h2><b>How to calculate debt-to-income ratio in 3 steps</b> </h2><p>Since lenders use your DTI to determine whether or not you’re capable of taking on more debt, it’s a good idea to know your DTI before you apply. Thankfully, the formula is pretty straightforward: </p><h3><b>Step 1: Add up your total monthly debt payments.</b> </h3><p>Add up all recurring monthly payments that factor into your DTI. </p><h3><b>Step 2: Divide that number by your gross monthly income.</b> </h3><p>Once you’ve totaled all your monthly debts, divide that number by your gross monthly income. </p><h3><b>Step 3: Convert the total into a percentage.</b> </h3><p>Take the number you’ve just calculated and multiply it by 100 to get your final DTI ratio. </p><h3><b>Debt to income ratio example:</b> </h3><p>Sarah wants to calculate her debt-to-income ratio before applying for a loan. Her monthly bills and income are as follows: </p><ul><li><p>Rent: $1,200 </p></li><li><p>Student loan: $400 </p></li><li><p>Credit cards: $300 </p></li><li><p>Gross income: $5,000 </p></li></ul><p>Sarah&#39;s total monthly debt payment is $1,900: </p><p> $1,900 = $1,200 + $400 + $300 </p><p>Sarah&#39;s DTI ratio is 0.38:  </p><p>0.38 = $1,900 ÷÷$5,000 </p><p>In other words, Sarah has a 38% debt-to-income ratio. </p><h2><b>How to lower your debt-to-income ratio</b> </h2><p>Like your credit score, there are a number of ways to improve your debt-to-income ratio. If your current DTI ratio is over 40% (or close to it), you can take a few different routes to improve it. </p><h3><b>Pay down existing debt.</b> </h3><p>Increase the amount you’re currently paying on your monthly debt. Rather than making the minimum credit card or loan payment every month, pay off slightly more. Even a small increase will help decrease your overall debt and lower your DTI ratio as a result. </p><h3><b>Avoid additional debt.</b> </h3><p>Focus on paying down your current debt without adding more recurring debt obligations. </p><h3><b>Postpone large purchases.</b> </h3><p>If possible, avoid making large purchases that will use up a large portion of your available credit. </p><h3><b>Create and stick to a budget.</b> </h3><p>If you don’t already have one, create a personal monthly budget and stick to it. Your budget can help you decrease monthly spending and increase monthly debt payments to pay down your existing debt faster. </p><h3><b>Check your DTI ratio regularly.</b> </h3><p>Make a note to recalculate your debt-to-income ratio on the same day every month. Note any changes, record your progress, and use it for motivation. </p><h2><b>The bottom line</b> </h2><p>The debt-to-income ratio is an important measurement used in the loan application and approval process. Understanding what it is, and what you can do to improve it, may help enhance your overall financial wellness and increase your ability to secure a future loan. To maintain a healthy DTI, keep paying as much as you can toward your debts each month. </p><h2><b>Debt-to-income ratio FAQ</b></h2><h3><b>What is a good debt-to-income ratio?</b> </h3><p>Generally, lenders consider at or below 36% a good debt-to-income ratio, though many will lend to individuals with a higher ratio. For example, a <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/">DTI of 43% is the maximum debt</a> to income a borrower can have for a qualified mortgage, but a DTI of 20% would be considered more favorable. </p><h3><b>Is monthly rent included in debt-to-income ratio?</b> </h3><p>Whether or not rent is included in the debt-to-income ratio calculation depends on the type of loan you’re applying for. For a <a href="https://www.lendingclub.com/personal-loan">personal loan</a>, any amount you pay toward housing such as rent counts toward your total monthly debt and will be included in calculating DTI. When applying for a mortgage, your current rental or lease payment is not included in your debt-to-income ratio calculation. </p><h3><b>How can I lower my debt-to-income ratio quickly?</b> </h3><p>The quickest way to lower your debt-to-income ratio (besides getting a pay or salary increase) is to pay off more of your debt than the minimum required. There are a number of different strategies for <a href="https://www.lendingclub.com/personal-loan">paying off debt</a>: the debt avalanche method will pay off debt the fastest, but look into the debt snowball and debt snowflake methods as well. </p><h3><b>What are some other ways to lower my debt-to-income ratio?</b> </h3><p>In addition to paying more toward your debts, you should also avoid taking on more debt and avoid or postpone large purchases that will add to it. Finally, you can find ways to increase your monthly income, such as taking on a side hustle or selling unwanted items online. </p>

Someone might be declined a personal loan due to poor credit score, high debt-to-income ratio, or insufficient income. Next steps include improving credit, reducing debt, or applying with a co-signer. Consider checking your credit report for errors and exploring other lenders.

<p>If you’ve been turned down for a personal loan—don’t panic, and try not to worry. The first thing to know is that having your loan application denied doesn’t define you as a person. Lenders must set minimum qualifications for all loan approvals. If you fall just shy of those qualifications, you may be declined. </p><p>That doesn’t mean you aren’t smart with money or financially responsible. It just means you must make a few financial adjustments to meet their threshold. Just because your loan application was declined this time doesn’t mean it has to be your last chance. In fact, there is a lot you can do to improve your odds of being approved. </p><h2><b>6 Reasons you might be declined for a personal loan</b>  </h2><h3><b>1. Bad credit history</b> </h3><p>When it comes to any loan—mortgage, student loan, or <a href="https://www.lendingclub.com/personal-loan">personal loan</a>—credit history is the number one factor lenders consider. Your credit history is the primary way lenders evaluate how likely you are to repay (or default on) a loan. If you’ve had credit hiccups in the past (e.g., past due accounts, collections, bankruptcy) <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-a-good-credit-score-and-how-to-boost-yours">your credit score</a> may not meet the lender’s minimum requirements. You can order your credit reports free of charge through <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a> to see where you can improve<a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score"> your credit score</a>. </p><h3><b>2. High debt-to-income ratio</b> </h3><p>Even if your credit history is OK, and you have made all your monthly payments on time, you may have your loan application denied if your debt-to-income ratio (the sum of all your debts divided by your monthly income) is too high.  Generally, a low DTI (under 40%) signals to lenders a healthy balance of debt to income. </p><p>To <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-to-income-ratio-how-to-improve-it">calculate your debt-to-income ratio</a>, add up all your current debt—including credit cards, auto loans, and student loans<i>—</i>and divide it by your income. If your DTI is too high, paying down debt drops your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization ratio</a> and improves your debt-to-income ratio, increasing your chances of approval. </p><h3><b>3. Unstable employment history</b></h3><p> Lenders generally want to see that any income listed on your application has been consistent so they can assume it will remain so moving forward. If you have different pay stubs, recently changed jobs (in the last 60 days), or have freelance work from multiple employers, it may create a snag in your income calculations. </p><p>If your income fluctuates because you’re self-employed or do seasonal work, that doesn’t mean your application will always be declined. While your paychecks may not be consistent or predictable, some lenders may be willing to look at your past tax returns so they can compare your income over a longer period of time. </p><h3><b>4. Minimum income requirement not met</b> </h3><p>Along with income stability, lenders look for proof of income to verify you can repay what you borrow. If your income is below the lender’s threshold, you may be denied, or offered a loan for a lower amount. Make sure you include all forms of income in your next application, including any income from side gigs, investment accounts, or child support payments. </p><h3><b>5. Loan purpose mismatch</b> </h3><p>Personal loans provide a lot of flexibility in how you can use the funds. However, some lenders may not allow you to use them for certain things like:  </p><ul><li><p>Secondary education (i.e., college tuition) </p></li><li><p>Making investments such as in stocks </p></li><li><p>Anything illegal or partially illegal (i.e., gambling).  </p></li></ul><p>Make sure the loan application matches your purpose. For example, if you need funds for a professional certification or training, looking into a private or federal student loan may be more appropriate. </p><h3><b>6. Missing information or paperwork</b> </h3><p>Loans almost always require several forms of paperwork, including employment and income information (including tax returns, pay stubs, or bank statements), a credit report, government-issued ID, and in some cases collateral documentation. If you are missing some of this information, you are essentially guaranteed to be denied. Make sure all of your paperwork is in order before you <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-apply-for-a-personal-loan">apply for a personal loan</a> again. You may end up not needing some of it, but it&#39;s better to have it handy just in case. </p><h2><b>How to improve your chances of getting approved for a personal loan</b> </h2><p>If your new loan application was denied for any of the reasons above, here&#39;s a short checklist of action items you can go through to improve your chances of being approved next time. </p><h3><b>1. Review your decline notice.</b> </h3><p>The very first thing you should do is understand why you were declined for a personal loan. Any lender who denies loan approval is required to send an <a href="https://www.thebalance.com/what-s-an-adverse-action-notice-959985">adverse action notice</a>, which lists the reason(s) your application was declined. If you were turned down because of something on your credit report, this notice will tell you what led to the decline in your credit report and the name of the credit bureau that reported the information. Because of the decline, you are eligible to receive a free copy of your credit report. </p><h3><b>2. Review your credit report.</b> </h3><p>Check your credit report for errors and dispute any inaccuracies about your personal finance history with the credit bureau. At least one in five consumers have an <a href="https://www.consumerfinance.gov/about-us/blog/common-errors-credit-report-and-how-get-them-fixed/">error on their credit reports</a>, according to a study by the Federal Trade Commission.  </p><p>For example, it’s possible someone else’s account information could have been included in your report. Or, if you filed for bankruptcy in the past, be sure your report does not include accounts that have been discharged.  Keep an eye out for inaccurate account information. If you paid a bill on time that is reported late, for example, you can dispute that information with the reporting credit bureau. </p><p>Closed accounts reported as still active could have a negative impact on your credit score if the account has negative information. Go over not only each account, but your account history as well.And always be on the lookout for any <a href="https://www.lendingclub.com/resource-center/personal-finance/identity-theft-7-tips-to-reduce-your-risk">signs of identify theft</a> such as unfamiliar accounts, purchases you didn’t make, and credit applications you didn’t complete. </p><h3><b>3. Boost your credit score.</b> </h3><p>If your loan application was denied despite an accurate credit report, it could be your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-a-good-credit-score-and-how-to-boost-yours">credit score</a> is too low. Common reasons include: </p><p><b>Late payments: </b></p><p>If you&#39;ve missed payments, be sure to get caught up, and continue making on-time payments. Late payments can stay on your credit file for up to seven years. </p><p><b>Debt-to-income ratio:</b></p><p>Are your credit balances high compared to your income? Pay down your debts as quickly as possible to lower your DTI and total credit utilization. (Struggling with debt? These <a href="https://www.lendingclub.com/resource-center/personal-finance/best-creative-ways-to-pay-off-debt">creative ways to pay down debt</a> can help you pay down your balances faster.) </p><p><b>Credit utilization: </b></p><p>Are your cards close to their maximum limits? Remember, it&#39;s not just total <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization</a> that matters, but each account limit. Try to bring all your credit balances below 30% for a score boost. </p><p><b>Recent inquiries: </b></p><p>Have you been applying for credit a lot recently? Business loans, home loans, auto loans? Too many hard inquiries in a short period of time will hurt your credit score and may signal that you’re in financial trouble and need cash quickly. Limit applications to only what you need, and try again in a few months. </br> </br><i>Remember, a hard credit inquiry will impact your credit, but a soft inquiry won’t. Most applications are hard inquiries, while pre-approvals are soft inquiries. Learn more about the </i><a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><i>differences between a hard and soft inquiry</i></a><i>.</i> </p><p><b>Lack of credit history: </b></p><p>If you just don&#39;t have enough credit history, consider becoming an authorized user on the account of a spouse or parent with good credit. Make sure the account you sign onto has a good payment history—the older the account, the better. You may also consider a <a href="https://www.experian.com/blogs/ask-experian/what-is-a-secured-credit-card/">secured credit card</a>, which lets you put down a deposit and borrow against it. The limit may not be high, but you’ll earn a monthly credit score boost as you make payments on time. </p><h3><b>4. Find a co-signer.</b> </h3><p>If you don’t have a steady income, have had some financial setbacks, or are still building a good credit history, applying with another person could help approve your application. Applying with a cosigner or co-borrower might even help you secure a better loan than what you would’ve received on your own, i.e., a better rate, a higher loan amount, or both. </br> </br>And there are additional factors to consider when applying for a joint personal loan. For example, both individuals are obligated to repay the loan, and both have rights concerning the funds. Here’s <a href="https://www.lendingclub.com/resource-center/personal-loan/personal-loans-with-a-cosigner-vs-co-borrower">what you need to know about applying with a cosigner or co-borrower</a>. </p><h3><b>5. Apply for a smaller loan amount.</b> </h3><p>Consider asking for a smaller personal loan than what you need or asked for previously. A smaller loan will appear less risky to a lender, and may help improve your overall DTI picture which could help you qualify. While applying for less than you need may delay reaching your goal as quickly as you had hoped, it could turn out to be the more financially responsible path. For example, if you can start paying down debt with a smaller loan at a lower rate sooner rather than later, that&#39;s a step in the right direction. Always consider all possible options, and run the numbers given your personal financial situation. </p><h3><b>6. Shop around.</b> </h3><p>Not all lenders have the same lending criteria and requirements. Rates, fees, and terms can also vary widely from lender to lender. By shopping around and comparing several loan offers against each other, you could end up saving hundreds, or even thousands, of dollars over the course of your loan. And after working through steps 1-5 above, you may want to try applying through a different lender simply to see if that makes any difference. </p><h2><b>Personal loan rejection reason FAQ</b> </h2><p>Still have questions? Some of these commonly asked questions may provide the answer. </p><h3><b>Why does a personal loan get rejected?</b> </h3><p>Many factors go into determining eligibility for a personal loan. The most common reasons for rejection include a <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-understand-your-credit-score">low credit score or bad credit history</a>, a high <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-to-income-ratio-how-to-improve-it">debt-to-income ratio</a>, unstable employment history, too low of income for the desired loan amount, or missing important information or paperwork within your application. Your loan could also be rejected if the purpose isn’t for an eligible reason—like trying to take out a personal loan for investing. </p><h3><b>What should I do if my loan application is rejected?</b> </h3><p>Lenders are required to provide an explanation letter for rejected applications. If you’re rejected, read through the letter and determine what can be remedied. For example, you can work to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score">improve your credit score</a> or <a href="https://www.lendingclub.com/resource-center/personal-finance/best-creative-ways-to-pay-off-debt">pay down high-interest debts</a> to improve your debt-to-income ratio. You can also try to reapply with a cosigner—someone with a high credit score and a secure income—or opt for a <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-apply-for-a-joint-personal-loan">joint personal loan</a>, where co-borrowers share both the loan funds and responsibility for repayment. Both can increase your chances of approval. </p><h3><b>Why was my loan declined?</b> </h3><p>Personal loans can be declined for many reasons, but in most cases it’s due to a poor credit score or unreliable credit history. Before reapplying, take a look at your credit report (you’re allowed one free report per year from Equifax, Transunion, and Experian). If your score is less than good (660 or less), <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score">try taking some time to improve it</a>. If you see any <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags">errors on the report</a>, dispute them immediately with the three major credit bureaus. </p><h3><b>How can I avoid being rejected for a personal loan?</b> </h3><p>Lenders look at your credit score, debt-to-income ratio, income, employment history, and credit history as key markers in determining loan eligibility. If possible, work to improve your personal finances before applying or opt for a joint personal loan with a creditworthy co borrower to strengthen your application. </br> </br>If you’re concerned about being rejected for a personal loan, consider <a href="https://www.lendingclub.com/personal-loan">checking your rate online first</a>. Checking your rate won’t affect your credit score and can help determine eligibility before you apply. </p>

Related Impact

{noun} A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.

<p>A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.</p><h2>What is Revolving Credit?</h2><p>Revolving credit is a type of credit that lets you borrow money as needed up to an amount called your credit limit. Borrowing reduces your available credit, and repayment replenishes your credit limit (minus the interest and fees charged). Revolving credit does not have a fixed number of payments. This differs from installment credit which lets you borrow a lump sum and pay it back over a set number of fixed monthly payments.</p><h2>How Does a Revolving Line of Credit Work?</h2><p>It helps to think of a revolving line of credit as a renewable source of funds within a set credit limit. The lender sets the credit limit upon application approval. You can use as much of your credit limit as you need, paying interest only on the money you borrow. As you repay what you’ve borrowed (plus interest and fees), your available credit replenishes, and you can continue borrowing against your revolving line up to the credit limit.</p><h3>Types of Revolving Credit</h3><p>The most common revolving credit products are lines of credit and credit cards.</p><p><b>Lines of credit </b>come in different forms, including home equity lines of credit (HELOCs), personal lines of credit, and business lines of credit. Credit lines are typically issued by banks and credit unions, and generally you can draw on your line using special checks, ATM, telephone, and online banking. You’ll only pay interest on the money borrowed from your line of credit. </p><p>Some lines of credit may be limited in how the funds can be used, such as only for balance transfers from credit cards.</p><p><b>Credit cards</b> are revolving credit accounts that, unlike lines of credit, require you make a purchase or cash advance to access your credit line. While card issuers reserve the right to change your credit limit, you can access your available credit as long as your account is in good standing. When you make purchases on a credit card, you can repay the balance in full by the end of your billing cycle to avoid interest charges and fees. If you don’t pay your outstanding balance in full,the balance “revolves,” or rolls over, to the next month and will accrue interest until paid in full. </p><p>Note: Both lines of credit and credit cards can be secured or unsecured. Secured accounts require collateral; unsecured accounts do not. For example, a HELOC uses your home as collateral. Credit cards are typically unsecured, but some secured cards require cash deposits as collateral.</p><h3>Why is Revolving Credit Important?</h3><p>Revolving credit offers greater borrowing flexibility than installment credit. For instance, if you get a $10,000 installment loan for a home remodeling project, you typically receive all the money at once and must start repaying on the entire loan balance immediately plus interest on that amount—even if you don’t use the funds right away. If you need more money, you’ll have to apply for a new loan.</p><p>On the other hand, if you get a line of credit or credit card with a $10,000 limit, you can draw on it as needed—say, $1,000 in January, $2,000 in April and $1,500 in June­—and interest will accrue only on the amounts you borrow. As you pay back what you’ve borrowed, your available credit is restored up to your credit limit, so you can make future purchases without needing to apply for additional credit.</p><p>Since it doesn’t require fixed monthly payments, revolving credit can also offer greater payment flexibility than installment loans. If money is tight in a particular month, you have the option of only making the minimum payment on a revolving account, potentially making it easier to meet other financial obligations.</p><p>Revolving credit can also serve as a financial cushion. Even if you never use it, it’s there in case you need quick access to small amounts of cash in an emergency.</p><h3>What Are the Risks of Revolving Credit?</h3><p>Revolving credit has some drawbacks you should be aware of.</p><p><b>Collateral risk:</b> If you fail to make payments on a secured revolving credit account, you could lose your collateral. With a secured credit card, that loss could be a few hundred dollars. With a HELOC, you stand to lose your home.</p><p><b>High interest rates:</b> Revolving credit typically has higher interest rates than installment credit. Interest rates for most credit cards and many lines of credit are also <i>variable</i>, meaning they can change over time based on economic conditions.</p><p><b>Excessive debt: </b>If you only make the minimum payment on a credit card, you could accumulate a large balance. Credit card interest is typically <i>compounded</i>, meaning interest accrues on both the balance of your purchases and on previously applied interest. Compound interest can cause your balance to snowball until it’s difficult to pay down.</p><h3>How Does Revolving Credit Affect Your Credit Score?</h3><p>Revolving credit could help your credit score in several ways.</p><ul><li><p><b>On-time payments:</b> Making revolving credit payments on time could boost your credit, since timely payments are a major factor in your FICO®  Score.</p></li><li><p><b>Responsible credit utilization:</b> Keeping your revolving credit balance below 30% of your credit limit could increase your credit score.  Ideally, you would pay your credit card balances in full each month.</p></li><li><p><b>Diverse credit mix:</b> A variety of accounts, including installment credit and revolving credit, could show lenders you can successfully manage different types of debt.</p></li></ul><p>Revolving credit could also have negative impacts on your credit score when not managed responsibly. </p><p><b>Late payments: </b>Missing payments could have a significant negative impact on your credit score. Setting up auto-payments on your revolving credit accounts can help ensure you never miss a due date.</p><p><b>Excessive credit utilization:</b> Consistently carrying balances that exceed 30% of your available credit limit can reduce your credit score. </p><p><b>Hard inquiry:</b> When you apply for revolving credit, creditors perform a credit check called a <i>hard inquiry</i>, which could cause a small, temporary dip in your credit score.</p>

{noun} The total annual cost to borrow money, including fees, expressed as a percentage.

<h2>What is Annual Percentage Rate (APR)?</h2><p>Annual percentage rate (APR) is the cost of borrowing money on an annual basis. APR is expressed as a percentage, to make it easier to compare the cost of credit. </p><p>APR and interest rate are sometimes used interchangeably, however, APR and interest rate are different. APR includes both interest plus fees applied over the course of a loan. Because APR is a more complete measure of the cost of credit, it is usually higher than the interest rate.</p><h2>How is Annual Percentage Rate Calculated?</h2><p>To calculate APR on a loan, you’ll need to know a few other numbers first:</p><p><b>Interest:</b> The total interest charges paid over the life of the loan, also known as the cost of borrowing money.</br><b>Fees:</b> Review the terms and conditions of the loan to find the fees that apply to your loan. Fees vary by loan type and lender. </br><b>Principal:</b> The original loan amount.</p><p><b>Days in the Loan Term (n):</b> Since APR measures the annual cost of borrowing money, multiply 365 (days) by the number of years in the loan term. For loan terms under one year, use the number of days.</br></br>The formula to calculate APR is: </p><img src="//images.ctfassets.net/orqped9h4wgz/6cJEgR4ftSGoIaSuKLlek6/a3ce252e07839182be4e7550cd09e08a/Formula-Calculate-APR.png" alt=""/><p>The steps to calculate APR are:</p><ol><li><p>Find the interest charges</p></li><li><p>Add the fees</p></li><li><p>Divide the sum by the principal balance</p></li><li><p>Divide by the number of days in the loan’s term</p></li><li><p>Multiply by 365</p></li><li><p>Multiply by 100</p></li></ol><h3>Credit Card APRs</h3><p>Credit card APRs do not reflect fees and since a credit card has no set loan amount or fixed repayment term, its APR is simply its interest rate.</p><p>Under the Truth in Lending Act, passed in 1968, lenders and other financial institutions must disclose APR when offering credit. </p><h2>Why is Annual Percentage Rate Important?</h2><p>Knowing the annual percentage rate helps you understand the true cost of borrowing. </p><p>For example, all lenders are required to disclose APR, which makes it easier to compare loans from different banks and make a more informed borrowing decision.</p><h2>Are There Different Types of APRs?</h2><p>There are different categories of APRs depending on the type of financial product.</p><h3>Credit Card APRs</h3><p>Credit cards have several APRs that may apply to different transactions or account activities.</p><ul><li><p><b>Purchase APR: </b>The rate you pay for purchases. </p></li><li><p><b>Balance transfer APR: </b>The rate applied if you use a card to pay down balances on other credit cards or loans. </p></li><li><p><b>Cash advance APR:</b> The rate charged on ATM withdrawals or cash-equivalent transactions, like money-order purchases. </p></li><li><p><b>Introductory APR: </b> A promotional interest rate for a limited period of time that is lower than the card&#39;s regular APR, sometimes as low as 0 percent APR.</p></li><li><p><b>Penalty APR</b>:  A higher-than-normal rate that results from violating a card’s terms of service. </p></li></ul><h2>What’s the Difference Between Fixed and Variable APRs?</h2><p>APRs can be fixed or variable. A fixed APR remains unchanged for the life of your loan. A variable APR fluctuates in sync with a published market index, like the U.S. Prime Rate.<b>   </b></p><h3>Adjustable-Rate Mortgages</h3><p>Home loans with variable interest rates are called adjustable-rate mortgages (ARMs). With an ARM, your APR is fixed for an initial term (typically one, three, or five years, but sometimes as long as 10 years), then resets every six or 12 months, based on market rates. </p><h2>What Affects APR?</h2><p>The APR you&#39;re offered depends on a few factors: </p><ul><li><p>Whether a loan or line of credit is secured or unsecured</p></li><li><p>Current economic conditions</p></li><li><p>Your credit history</p></li></ul><p>Lenders may also consider your income and assets, down payment, and where you live when determining your APR.</p><h2>How Do You Get a Good APR?</h2><p>Getting the best APR on a loan or credit card typically requires shopping around. </br></br>Start by prequalifying with multiple lenders. Prequalifying is a quick process where you provide some basic information about your income and borrowing goal. Then, lenders respond with a preliminary, non-binding estimate of the loan amount and APR. This is typically done through a soft credit check, which doesn’t impact your credit.</p><p>Then, compare the preliminary offers and submit a full application to your lender of choice. With your detailed financial information and a hard credit inquiry, which will impact your credit, lenders can make a formal loan offer that includes your APR, fees, and repayment terms. </br></br>If you’re unhappy with the terms you’re offered (or if lenders decline your applications), your credit history might be the culprit. If this is the case, you can work to pay down your existing debts and bring late payments current, which can improve your credit score and chances for approval over time.</p>

{noun} The amount of unpaid interest that has accumulated as of a specific date, either on a loan or an interest-bearing account or investment. 

<h2>What Is Accrued Interest? </h2><p>Accrued interest is the amount of unpaid interest that has accumulated as of a specific date, either on a loan or credit card you’re repaying or on an interest-bearing account or investment.  </br> </br>Accrued interest can be owed or earned. For example, with a loan or credit card, it’s the amount of interest (payment you owe) that has been incurred since you made your last payment. With an interest-bearing account or an investment, such as a bond, it&#39;s the interest (income you earned) that has accumulated since the last time you received a payment from the financial institution or bond issuer. </p><h2>How Does Accrued Interest Work? </h2><p>The way accrued interest works depends on several factors, including the type of account, the balance or principal, the interest rate, timing, and whether you are borrowing money (such as with credit cards, auto loans, and personal loans), or earning money (such as with interest-bearing checking or savings accounts).  </p><h2>Accrued Interest on Loans </h2><p>Personal loans, auto loans, and other types of debt charge interest to their borrowers. Most lenders use the simple interest method of accounting, which means that interest that accrues each day is based only on the principal balance of the loan and doesn&#39;t compound on previously accrued interest. </p><p>For example, on a personal loan, the interest on your debt accumulates daily based on your current loan balance and interest rate.  When you make a loan payment, a portion of your total payment amount goes toward the interest that has accrued since your last payment and the remainder goes toward paying down the principal balance of your loan. </p><p>If you have a fixed interest rate, the daily interest amount will go down over time as your principal amount owed decreases with on time payments. With variable rate loans, the amount of interest that accumulates can fluctuate along with the loan&#39;s interest rate, however there&#39;s generally a downward trend with timely payments.  </p><p> </p><h2>Accrued Interest on Bank Accounts </h2><p>Generally, with interest-bearing deposit accounts, such as a high-yield checking or savings account, interest typically accumulates daily and is paid out monthly. The amount of interest that accrues is based on your balance and the account&#39;s annual percentage yield or APY (which may adjust higher or lower as rates rise or fall) and compounding interest. The higher the APY and your balance, the more you&#39;ll earn. </p><p>Also, most banks and savings institutions will compound the interest you earn, usually daily. This means that the interest that accrues each day is based not only on your principal account balance but also on the interest that has accumulated since the last payment.  </p><p>For example, let&#39;s say you have a $10,000 balance in a savings account with an interest rate of 5%. On the first day, your balance earns $1.37 in interest, and that gets added to your interest-earning principal—compounded—at the end of the day. That happens every day. </p><p>By the end of the year, your principal will have grown to $10,512.67—$500 in interest on your principal balance, and $12.67 from the interest earned on your interest.  </p><p> Calculation for daily interest rate: </p><p>0.05 / 365 = 0.000136986 </p><p> Calculation for first day’s interest: </p><p>0.000136986 x 10000 = 1.36986 </p><p> While your interest rate is 5% compounded daily; your total return including compounding, or <a href="https://blog.lendingclub.com/apr-vs-apy-whats-the-difference"><u>annual percentage yield</u></a>,  is 5.1267%. </p><p>Compounding interest increases your savings over time, especially in a rising interest rate environment. </p><h2>Accrued Interest on Bonds </h2><p>If you&#39;re investing in bonds, interest is typically paid out every six months, and the amount that accrues between payments depends on the face value of the bond and its interest rate. This calculation is known as yield to maturity. </p><p>Interest on bonds does not compound; that is, you don’t earn interest on your interest. </p><h2>How Accrued Interest Affects Borrowers </h2><p>If you borrow money, understanding accrued interest gives you an idea of how your loan&#39;s costs are incurred. As you make your regular monthly payments, for instance, the amount of interest that accumulates over time decreases. And if you make additional principal payments on top of your regular payments, you can reduce how much interest accrues even more.   </p><p>Keep in mind that, if you make an extra payment on a loan the lender may use some of that money to pay off the interest that has accrued since your last regular payment unless you specify otherwise. You can request that the lender put the full amount of your additional payment toward the principal balance, saving you more money on interest in the long run. </p><p>Understanding how accrued interest works is particularly important if you have student loans. While college students aren&#39;t typically required to make monthly payments while they&#39;re still in school, interest accrues from the moment the loans are disbursed.  </p><p>For borrowers with federal subsidized loans, the federal government will typically pay interest that accrues while they&#39;re in school and during future deferment periods. If you have unsubsidized loans or private student loans, all the interest that accumulates while you&#39;re in school (and during periods of deferment or forbearance) is added to your balance once repayment begins.  </p><p>If you want to avoid a growing balance, consider making interest-only payments while you&#39;re still in school. </p><h2>How Accrued Interest Benefits Savers </h2><p>If you have an interest-bearing deposit account, look into how often (daily, weekly, monthly, quarterly, semi-annually, annually) your financial institution compounds the interest that accrues in your account. The more frequently interest is compounded (e.g., daily vs. quarterly) makes it possible for you to earn more interest more quickly. </p><p>And if you&#39;ve invested in bonds, understanding how accrued interest works can help ensure that you get the money you&#39;ve earned, especially if you sell the bond between scheduled interest payments. For example, if you sell a bond three months after your last payment, you won&#39;t receive the amount of interest that accrued during that time. Because the buyer will receive the full semi-annual (every six months) interest payment despite only owning the bond for three months, they should pay you the amount that has accrued since your last payment on top of the price of the bond. </p><h2>How Is Accrued Interest Calculated? </h2><p>On loans, lenders generally calculate interest on a daily basis using either a 360-day or 365-day year. The lender will divide the loan&#39;s interest rate by one of those numbers to determine your daily interest rate, which it then applies to your balance. </p><p>On interest-bearing deposit accounts, interest generally accrues daily. Depending on how often your financial institution compounds interest, the amount that accrues each day may be calculated based on the principal balance plus previously accrued interest. </p><h2>What Is an Example of Accrued Interest?  </h2><p>Let&#39;s say you have a personal loan with a $20,000 principal balance and a 12% interest rate. To calculate the amount of interest that accrues every day, you&#39;ll do the following equation: </p><p>Calculation for daily interest rate: </p><p>0.12 / 365 = 0.000328767123288 </p><p>Calculation for daily accrued interest: </p><p>0.000328767123288 x $20,000 = $6.58  </p><p> In other words, you&#39;ll have $6.58 in daily accrued interest. Over 30 days, that amounts to $197.40.</p>

A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.

<p>A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.</p><h2>What Is a Charge-Off?  </h2><p>A charge-off on your credit report indicates the financial institution or creditor has written the account off as a loss and has stopped attempting to collect on a debt that you owe. However, a charge-off does not mean your debt is forgiven—it may be transferred to a collection agency or sold to a debt buyer. As long as the debt remains outstanding, you&#39;re still responsible to pay it. </p><h2>How Does a Charge-Off Work? </h2><p>When you miss a payment on a loan or credit card or have a bank account with a negative balance, the creditor or financial institution will attempt to collect the amount you owe. At some point, the creditor may determine the debt is uncollectible and decide to charge it off. This means the creditor has written off the remaining balance as a loss.  </p><p>At this point, the creditor will report the account as “Charged Off” to the credit reporting agencies which will appear on your credit reports along with the account balance. If the charge-off is legitimate and you can&#39;t convince the creditor to remove it, a charge-off can remain on your credit reports for up to seven years after your first missed payment. </p><p>Once a creditor has charged off a debt, they may decide to sell it to a debt buyer or transfer it to a debt collection agency for pennies on the dollar. If this happens, your account will be closed, interest will stop accruing on your balance, and your credit report will reflect that the account was &quot;Charged Off.&quot; However, you will still be liable for paying off the debt to the debt collection agency. Additionally, the collection agency may report a collection account for the same debt, further impacting your credit score. </p><h2>Will a Charge-Off Impact Your Credit Score? </h2><p>Your payment history is the most influential factor in your FICO credit score. Missing just one payment could have a significant negative impact on your credit score. </p><p>If a debt balance remains unpaid long enough for the creditor to stop attempting to collect payment, the worsening delinquency and subsequent charge-off could have a long-term  and far reaching impact to your credit score.  </p><p>For example, a low credit score and history of nonpayment may make it more difficult to get approved for credit in the future. It may also impact your ability to get approved for a residential lease or to qualify for lower interest rates on auto or homeowners insurance.  </p><h3>How Can You Repair a Charge-Off? </h3><p>The best way to repair a charge-off is to prevent it from happening. If you start missing payments, don&#39;t ignore the situation. Contact your lender and ask if there’s anything that can be done to help you avoid a charge-off situation. </p><p>In the event your debt is charged off, as long as there is a balance, you’re still responsible for repayment which is why you should consider ways to pay off the debt as soon as possible to avoid having it go to collections. Even if you cannot pay off the debt in full, you may want to consider negotiating a payment settlement with the creditor for less than what you owe or, if necessary, having the debt discharged in bankruptcy.  </p><p>In some cases, you may be able to negotiate with the lender to remove the charge-off from your credit report in exchange for full payment—a process known as “pay for delete.” Even if you can&#39;t get it removed, paying off the balance could potentially reduce the impact to your credit score.  </p><p>If the creditor does sell the debt to a collection agency, you&#39;ll face more attempts to collect the amount you owe. Some debt collectors may even resort to lawsuits to force collection through a court order. </p><h3>How Can You Limit Charge-Off Damage? </h3><p>The timeframe for when a creditor decides to charge-off an account ranges from 120 to 180 days from your initial delinquency date. You&#39;ll typically receive letters and phone calls reminding you of the past-due payment, urging you to get caught up. Don&#39;t ignore the creditor—this is the best time to talk to the lender to see if you can avoid a charge-off. </p><p>If you&#39;ve had an account charged off recently, contact the creditor as quickly as possible to verify the accuracy of the account details and look for opportunities to pay off some or all of the debt to avoid transfer to a collection account and further damage to your credit score. </p><p>In some cases, a charge-off could be reported in error. If this happens, it could damage your credit score, so you should act quickly to dispute the negative item with the credit reporting agencies. As long as the dispute isn&#39;t frivolous, the credit bureaus are required to investigate it and remove or update the information if it&#39;s found to be innacurate.  </br> </br>To contact the credit bureaus:  </p><ul><li><p><a href="https://www.equifax.com/personal/credit-report-services/credit-dispute/"><u>Equifax</u></a> </p></li><li><p><a href="https://www.experian.com/contact/personal-services-contacts.html"><u>Experian</u></a> </p></li><li><p><a href="https://www.transunion.com/credit-disputes/dispute-your-credit"><u>TransUnion</u></a> </p></li></ul><p>If the creditor decides to charge-off your account, it&#39;ll only report only to the credit reporting agencies that it normally reports to. For many lenders, it&#39;s all three, but some lenders may only report to one or two of the major credit bureaus. </p>

{noun} An interest rate that remains the same for a set time, usually for the life of the loan.

<p> An interest rate that remains the same for a set time, usually for the life of the loan.</p><h2>What Is a Fixed Interest Rate?</h2><p>A fixed interest rate is an interest rate that remains the same for a set time, usually for the life of the loan. With fixed-rate financing, borrowers can enjoy payment stability and avoid the risk of a variable interest rate—which may increase substantially over time, especially in rising interest rate environments.</p><h2>How Do Fixed Interest Rates Work?</h2><p>When you take out a loan with a fixed interest rate, your loan terms will define the fixed rate period.</p><p>Generally, for financial products like fixed rate mortgages and personal loans, your interest rate will remain the same throughout your loan term, as will your monthly payment amounts.</p><p>For financial products such as adjustable rate mortgages, the interest is variable, which means it can change periodically. Often, an adjustable rate mortgage (ARM) will have an initial period where the rate is fixed. After the fixed period, your interest rate may stay the same or it may adjust based on prevailing interest rates at the time.</p><h2>What Is the Difference Between Fixed and Variable Interest Rates?</h2><p>Fixed interest rates generally won’t change—either for the life of your loan or during a predetermined fixed period. In contrast, variable interest rates fluctuate based on market conditions and may change at any time.</p><h3>What Benefits Do Fixed Interest Rates Offer?</h3><p> Having a fixed rate loan offers several benefits for your finances.</p><ul><li><p><b>Financial Predictability. </b>A fixed interest rate makes it easier to plan your finances since your monthly payments don’t fluctuate over the fixed period, usually the life of the loan. Such predictable payments can  help you more easily manage your budget and alleviate stress.</p></li><li><p><b>Eliminate Interest Rate Risk. </b>With a fixed interest rate, you don&#39;t have to worry if interest rates start to increase in a volatile economy. Compared to loans with variable rates, a fixed-rate loan with a lower interest rate could save you money in a rising interest rate environment.</p></li><li><p><b>Potentially Lower Borrowing Costs. </b>With fixed-rate loans, you’ll know your total borrowing costs—including interest and fees—before you sign your loan documents. With variable-rate loans, it’s difficult to calculate your total borrowing costs since your interest rate may change substantially over time.</p></li></ul><h3>What Are the Drawbacks to Fixed Interest Rates?</h3><p>While a fixed interest rate can help you plan your finances for the long term, there are a few drawbacks to consider.</p><ul><li><p><b>Potentially Higher Rates. </b>Adjustable-rate financial products often have lower interest rates for an initial, introductory fixed period which may temporarily lower your cost to borrow. Fixed-rate products don’t offer such “teaser” rates.</p></li><li><p><b>Risk in Decreasing Interest Rate Environments. </b>If interest rates start going down, you may end up paying more to borrow on a higher interest rate than if you took out a new loan.</p></li><li><p><b>Refinancing Costs. </b>Even if you decide to refinance to get a lower rate, refinancing costs may outweigh the savings you may realize, and the process can be time-consuming. It’s  important to compare the total cost of borrowing of your existing versus a potentially new loan before making a decision.</p></li></ul><h2>What Can You Do to Get a Good Fixed Interest Rate?</h2><p>Generally, having a high credit score and a demonstrated track record of responsible debt management can help you land a lower fixed interest rate. In contrast, if you have a low credit score and a spotty history of on-time payments, the lender may view you as a higher-risk borrower and may not offer you the best fixed interest rate they have available.</p><h2>Can You Switch from a Variable Interest Rate to a Fixed Interest Rate?</h2><p>In most cases, you can&#39;t switch from a variable to a fixed interest rate on an existing loan. While you may be able to refinance your loan—either with your current lender or a new one—and move to a fixed-rate loan that way, it’s important to consider how well you would be able to cope with economic uncertainty. A low variable rates may be tempting initially, but should economic conditions sour and rates begin to rise rapidly, it may be difficult to find a good fixed rate when you want one. Or you may experience an unexpected obstacle, like job loss, that could make refinancing into a fixed interest rate loan difficult.</p><h3>Are Credit Card Interest Rates Fixed?</h3><p>Generally, credit card interest rates are variable, not fixed.</p><h3>Are Student Loan Interest Rates Fixed?</h3><p>It depends on the type of student loan. Student loans like Perkins Loans and PLUS Loans have fixed interest rates. Many other direct federal student loans—both subsidized and unsubsidized—have fixed rates as well.</p>

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