What is a characteristic of a fixed rate loan?

A fixed rate loan is characterized by a consistent interest rate that remains unchanged over the life of the loan. This means that the borrower will make the same payment amount—often broken down into principal and interest—at regular intervals until the loan is fully paid off. This predictability in payment amounts allows the borrower to budget effectively, as they can rely on knowing exactly how much needs to be paid each month without the risk of fluctuations common in other loan types.

The other characteristics, such as variable interest rates, lower initial payments compared to adjustable loans, and flexible payment options, do not apply to fixed rate loans. Instead, those features may be found in different types of loans, allowing for alternatives that may suit specific financial situations but do not represent fixed rate loans.