The interest rate on variable rate loans is typically indexed to other market rates of interest.

Name: The interest rate on variable rate loans is typically indexed to other market rates of interest.
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Variable rate loans often use a benchmark interest rate such as the prime rate or LIBOR as a reference point for setting the interest rate on the loan. This means that the interest rate on the loan will fluctuate along with changes in the benchmark rate.

The Interest Rate on Variable Rate Loans Is Typically Indexed