Definitions for "Adjustable-rate loan"
Also known as a variable-rate loan, usually charges a lower initial interest rate than a fixed-rate loan. The interest rate fluctuates over the life of the loan based on market conditions, but the loan agreement usually sets maximum and minimum rates. When interest rates rise, generally so do your loan payments; and when interest rates fall, your monthly payments may be lowered.
An adjustable rate loan has provisions to change the interest rate at prespecified points in time based on changes in a market index, a lenderĂ¢s cost of funds or other factors as determined by the lender.
See variable interest rate.