A variable rate is an interest rate that can change during the life of a loan, rather than staying the same throughout. It often moves in line with an underlying reference rate set by the wider market.
Variable versus fixed
A fixed rate stays the same for the agreed period, so repayments are predictable. A variable rate can rise or fall, which means repayments or the total cost can change over time. Each suits different priorities.
- A fixed rate gives certainty over repayments.
- A variable rate can move up or down over the term.
- Which applies to your facility is stated in your offer.
What to consider
If you value certainty for budgeting, a fixed rate may feel more comfortable. If you can absorb some movement, a variable rate may suit. The right choice depends on your company's cash flow and appetite for change.
Credicorp lends only to UK limited companies and LLPs for business purposes. We do not quote any rate here; the rate type and the rate itself for your facility are set out in your own offer. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply.
See also: What is a fixed interest rate?, Can I have several Flex drawings running at the same time? and Can I shorten or extend my loan term?.