Capped Rate
Content
Definition
Capped Rate is an interest rate that has a maximum limit on the rate that can be charged, regardless of market fluctuations.
Usage and Context
Capped rates are common in loans and mortgages. They give borrowers peace of mind. Rates won`t skyrocket even if market rates do.
Frequently asked questions
- What is a capped interest rate? A capped interest rate has a set max limit. It keeps rates from going too high.
- What is the purpose of the interest rate cap? The cap`s goal is to protect borrowers. It keeps their rates from going too high due to market changes.
- Who uses interest rate cap? Borrowers like homeowners or businesses use it. It helps them know their highest possible rate.
Benefits
Capped rates protect against sudden rate increases. They make budgeting easier and more predictable for borrowers.
Conclusion
Capped rates offer a safety net. They ensure your interest rates won`t exceed a certain level, no matter the market.
