Fixed Rate

Fixed rate means an interest rate that stays the same for a set period of time. In simple terms, a fixed rate does not change during the agreed period. Fixed rates are important because they make payments more predictable. Borrowers can know in advance how much interest they will pay, which can make budgeting easier. For example, if you take a loan with a fixed 5% interest rate for five years, the interest rate stays at 5% during that period. A fixed rate is not the same as a variable rate. A fixed rate stays the same for a set period, while a variable rate can change over time.