Variable-rate loan

Variable-rate loan

Loan made at an interest rate that fluctuates depending on a base interest rate, such as the prime rate or LIBOR.

Variable-Rate Loan

A loan with an interest rate that changes periodically. Generally speaking, a variable rate loan is linked to some major benchmark rate; for example, the interest rate may be stated as "LIBOR + 1%." The loan may or may not have a cap on how much the interest rate can rise or fall, or on how often the interest rate may change. Very often, the initial interest rate for a variable-rate loan is lower than that for a fixed-rate loan. This allows more people to qualify for a loan; however, this kind of loan can be risky because the interest rate (and therefore the monthly payment) can rise unexpectedly. See also: Adjustable-rate mortgage.
References in periodicals archive ?
f) the interest rate on a variable-rate loan WIBOR for term 1 month, effective zaktEry interest is charged, plus the bank~s margin,
99 per cent interest on her variable-rate loan, explained: "They enabled us to sell our house, which provided us with a deposit for buying our second home.
According to loan documents and the lawsuit, Myra Plant obtained a variable-rate loan of $950,000 at 8 percent interest on Feb.
If you think that's likely to happen then you may be better off choosing a variable-rate loan.
A IT depends whether you have a fixed-rate or variable-rate loan.
So, if rates go up by a higher amount than the cap allows, the variable-rate loan will cover part, but not all the increased cost of interest rates paid on deposits.
In fact, despite the current period of low interest rates, a variable-rate loan actually would have saved students money over a fixed-rate loan in 13 of the last 18 years, according to the Congressional Research Service.
A variable-rate loan makes more sense for some people.
Assuming the BBB firm's short-term loan was at a floating rate and the AA firm's long-term loan was at a fixed rate, the BBB firm's variable-rate loan was effectively transformed into a fixed-rate loan, and the AA company's fixed-rate loan was effectively transformed into a variable-rate loan.
Discover also offers a variable-rate loan currently at 3.
Borrowers have been tempted by deals promising savings of up to pounds 1,920 in the first year of a pounds 100,000 mortgage compared with a typical single variable-rate loan.
Any company with an overdraft or with a variable-rate loan found the cost rose by 0.

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