Fixed (rate)

Debt Term

A fixed rate loan has an interest rate that does not change during the term of the loan.

The opposite of a fixed rate loan is called either a floating rate, an adjustable rate, or a variable rate loan.

For longer term loans, a fixed rate will generally be more expensive in the initial rate than a floating/adjustable/variable rate. This is because over the long term, there is risk to the lender that interest rates in general will rise. That decreases the value of the loan. You as the borrower pay with higher interest rates for the lender to assume that interest rate risk.

Don Gooding

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