March 15th, 2010
if a company takes out a £10m loan at a fixed rate of 6%, regardless of how the interest rate changes - they will continue paying at 6%. Correct?
In theory - they will pay 6% but if it rises to 9% - they pay at 9% but thewn are refunded the difference by the bank.
Same way, if it decreases to 3% they will pay at 3% but then pay the bank the differencefixed means fixed.
however that is the NOMINAL rate, the ACTUAL rate you're paying depends on market interest rates, inflation, and the value of the dollar. however, a fixed rate will fluctuate minorly compared to a variable rate that will follow the market.
I have a fixed CD at 4.88% however i'm earning slightly more.if i had a variable rate i would be earning less in these economic times. These kinds of things also depend on if you are paying or being paid, and the terms of any individual agreement. If it's fixed at 6% they'll pay 6%
Don't know where you got that daft idea from. If you have a fixed rate it's exactly what it says, FixedNo. If it is fixed rate, they will always pay 6% regardless of other rates unless they refinance the loan.
i thought if you had a loan at a fixed rate of 6% then what ever the happens to the interest rate would have no effect on the loan as it is a fixed rate of 6% fixed rate of 6% will always be 6% for the life of the loan.
Webster says
fixed: not fluctuating or varying The first part is right - it is £10m capital borrowed at 6% fixed. They will continue to pay the 6% to the bank on the outstanding capital (until the fixed rate expires). Obviously, if the company repays £5m, they will then only be due 6% on the remaining £5m.
The rest of your question is confusing - if the interest rate rises to 9% (although this implies the rate is varied), the company will pay 9% on the balance. Nothing is refunded to anyone. The interest repayments rise, that's all.
Same applies if the rate is lowered. Nothing is refunded. From the date of the variation, the company is charged the altered rate.
I'd say if it's fixed at 6% for the term of the loan you pay 6%.Loans are contract between you and your bank. Whatever the term you agree when you obtain the loan is what is going to happen to you.
If the loan has a fixed rate, then no matter how the economy change and the Prime Rate or other interest rates change, your interest will not change. If your loan says 6%, you will always pay 6%.If it is a fixed rate loan, the interest is always calculated and paid at exactly 6%. If the rates go up to 9 or down to 3, new loans from the bank will earn interest at those rates, but it has absolutely no effect on existing loans.Correct! but there is no change in a fixed rate loan. When the Feds incresae the interest rate, that will not affect the current contracted loan. It is only charged the 6% no matter what.#If you have any other info about this subject , Please add it free.# |
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