Fixed Rate Loan
What does it mean
A Fixed Rate Loan refers to a note where the interest rate will not change during the life of the loan as long as payments are made as prescribed in the note.
Why does it matter
A Fixed Rate Loan is one of the most commonly used products of a banker, and it is good to understand what you (as a banker) are signing both a customer and the bank up for. When a loan with a fixed rate is given to a customer, the entirety of the interest rate risk sits with the bank, and the borrower has none. If rates increase or decrease, it is the bank who either benefits or loses. This risk is controlled by limiting the term (length) of the loan to a level that is both manageable for the bank as well as palatable to the customer.
Other Relevant Terms
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Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
