Fixed Rate Loan

Type of loan in which the interest rate does not fluctuate with general market conditions. There are fixed rate mortgage (also known as conventional mortgage) and consumer installment loans, as well as fixed rate business loans. Fixed rate loans tend to have higher original interest rates than flexible rate loans such as an Adjustable Rate Mortgage (ARM), because lenders are not protected against a rise in the cost of money when they make a fixed rate loan.

The term fixed rate may also refer to fixed currency exchange rates. See Fixed Exchange Rate.

Type of Loan in which the interest rate does not fluctuate with general market conditions. Examples include fixed-rate mortgage loans, also known as conventional mortgages, and consumer installment loans. See also Adjustable-Rate Mortgage (ARM).

Loan with an interest rate that does not vary over the term of the loan, as opposed to a variable rate loan or Adjustable Rate Mortgage. Fixed rate loans generally are constant payment, fully-amortizing loans, for example, a 30-year fixed rate mortgage repayable through equal monthly payments of principal and interest. Many consumer installment loans, such as auto loans, boat loans, and home improvement loans, are made at fixed rates. Fixed rate loans often have a higher initial cost than adjustable rate loans because the lender isn't protected against increases in money costs-the lender's cost of funds-but the borrower has the comfort of knowing the rate and payment will not vary over the life of the loan.