A fixed interest rate is a rate that stays the same for an agreed period, regardless of what happens to wider interest rates in the market. For a borrower, this means the cost of that part of the borrowing is known in advance and does not move up or down during the fixed period.
The main benefit: predictability
The biggest advantage of a fixed rate is certainty. Because the rate does not change, the repayments tied to it are predictable, which makes budgeting and cash-flow planning easier for a business.
- Repayments stay steady through the fixed period.
- You are protected if market rates rise.
- It can make planning more straightforward.
How it compares to variable
The alternative is a variable rate, which can move over time. A fixed rate trades the chance of benefiting from falling rates for the certainty of knowing where you stand. Neither is automatically better; it depends on the business and how much predictability matters to you.
Credicorp lends only to UK limited companies and LLPs for business purposes. Whether your Credicorp Flex or Credicorp Slice facility carries a fixed or variable rate, and the exact rate that applies, is set out in your offer. If you are unsure which suits your business, ask our team.
See also: What is a variable rate?, Can I pay off a Credicorp Flex drawing early? and Can I shorten or extend my loan term?.