A fixed-rate loan is a type of loan in which the interest rate remains constant throughout the term of the loan, resulting in predictable, stable payment amounts for the borrower.
For example, a dental practice takes a $200,000 fixed-rate term loan at 6.5% over 7 years, resulting in a constant monthly payment of $2,980. The predictable payment makes it easy to budget cash flow, and the business knows exactly when the loan will be fully paid off.
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