Variable-rate loan

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Variable-rate loan

Loan made at an interest rate that fluctuates depending on a base interest rate, such as the prime rate or LIBOR.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Home equity application volume increased 34 percent, compared to the same quarter in 2018, further growing our variable rate loan portfolio.
Collateral Performance: The VSAC 2012-B trust pool consists of 100% private student loans originated under VSAC's variable rate loan programs.
For example, a variable rate loan will often have a lower interest rate than a fixed rate loan with a similar maturity because the borrower is assuming interest rate risk.
Mark McGovern and Scott Peterson of CBRE's San Diego office worked on behalf of Invesco Real Estate and San Diego-based developer Cruzan to secure a four-year, variable rate loan through Cornerstone Real Estate Advisers Inc.
Depending on movement of rates, the third party swap provider will either (1) pay the additional amount needed to make up the difference between the fixed and LIBOR-floating rate [if the variable rate loan is higher than the fixed rate] or (2) pocket the extra money [if the fixed rate is greater than the variable rate].
Scotwest Credit Union, which is open to people living or working in the West of Scotland, offers a fee-free variable rate loan at 4.99 per cent and fixed rates of 4.5 per cent and 5.99 per cent, both with a pounds 350 fee.
This is more than double the current Bank of England base rate of 3 per cent and well up on the best mortgage available for a borrower with a 40 per cent deposit of 3.99 per cent, offered as a variable rate loan by HSBC and a one year fixed rate deal by the Woolwich.
Bank A offers a fixed rate loan of 10 percent or a variable rate loan of the LIBOR rate (LIBOR currently at 3 percent) plus 4 percent to counterparty A.
The Chela School-Certified Loan: A competitive, variable rate loan with no pre-set annual loan limits and relaxed credit criteria.
Neubig, national director of the quantitative economics and statistics group with Ernst and Young, also likened the fixed consolidation interest rates to "recent developments in the mortgage market," which, he said, have allowed the nation's homebuyers to choose between a fixed rate or a variable rate loan. Neubig said the result has been a "benefit to both borrowers and the residential housing market."
Operators with a variable rate loan may not be in loan default because the current low-interest environment is enabling them to survive.
CFC will convert existing 7-Year SFR loans to either a fixed rate or a variable rate loan, for a fee, paid quarterly over the remaining quarters in the current cycle.

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