Wells Fargo offers competitive student loan rates with fixed and variable interest rate options. While variable student loan interest rates usually start lower than fixed rates, a fixed rate option can offer protection if interest rates go up over time.
Fixed interest rates:
- Remain the same over the life of the loan, and ensure your monthly payments remain stable over time.
- Allow you to better predict how much total interest you will pay on your student loan.
- If interest rates fall after locking in a fixed rate, your monthly payments may be higher than with a variable rate for a certain period of time.
Variable interest rates:
- Generally provides a lower initial rate on student loans than fixed rates.
- May rise or fall as the Prime rate adjusts over time, which affects your monthly payment amount.
- Your payments may vary on a monthly basis, which can lead to payments being higher than a fixed rate.
How variable loan rates work
A Wells Fargo variable interest rate student loan is based on two factors: the Index (Prime rate) which can go up or down depending on market conditions, and the margin, which does not change. If rates were to increase at a steady pace, you will never exceed our maximum interest rate cap.
Interest rate = Prime rate + Margin
|Interest rate ||Prime rate ||Margin |
The percentage that lenders charge customers for borrowing money.
Can change when Prime rate changes.
|A standard interest rate index many lenders use as the basis for determining the rate charged on a loan. ||A fixed percentage determined by the lender, based upon your credit and other factors when you apply for a loan. |
How rates impact monthly payments
The table shows sample annual percentage rates and monthly payments, based on a $10,000 loan with a 15-year repayment term.
|Customer ||Annual Percentage Rate ||Monthly payment |
|A ||3.50% ||$71.49 |
|B ||5.00% ||$79.08 |
|C ||7.50% ||$92.70|