What is an adjustable Prime or LIBOR rate loan?
Prime is the interest rate that U.S. banks charge to their most creditworthy customers. Adjustments to the prime rate are made by banks at the same time although, the prime rate does not adjust on any regular basis. LIBOR is an acronym for “London Inter-Bank Offered Rate”. It’s similar to the U.S. Fed Funds Rate. It represents the rate at which banks are willing to loan money to each other in London. It’s an international standard for interest rates and it can be expressed as 1-month, 3-month, 6-month and 1-year rates. Adjustable Prime or LIBOR rate loans are loans that adjust up or down with Prime or LIBOR.
