There are two types of interest rates available to the educated borrower. The first type we'll discuss is the variable rate. As the name implies, this rate will vary from time to time as the market fluctuates (goes up and down). Most lenders have a suite of variable rate products, with their most expensive one called The Standard Variable Rate. The Standard Variable Rate is generally slightly lower than the 2-year fixed rate, however this varies from lender to lender, and some lenders may even have it lower than their 1 year fixed rate. A variable rate loan has many pros, and really just one con. The con is that if interest rates rise, then the loan interest rate will rise along with the loan repayments. The interest rate is not 'locked in' for a specific period of time, meaning that as the interest rate market changes, the repayments will change with them. The good thing is, that if the rates go down so will the repayments.

A variable rate loan's main benefit is that it will generally allow some options for making extra repayments, which in turn allows a borrower to pay off their loan more quickly, saving them more money. These loans generally have the 'bells and whistles' options, and will sometimes have discounts attached.