Floating-rate loans are financial products where the interest rate is not fixed but varies over time, typically in accordance with a benchmark interest rate. These loans often tie their rates to indices like LIBOR, which means that as the benchmark rate fluctuates, so does the interest cost for the borrower. This arrangement can benefit borrowers when interest rates decrease, but it also poses risks if rates rise unexpectedly.
congrats on reading the definition of Floating-rate loans. now let's actually learn it.