Final answer:
Fixed rate loans have a set interest rate that remains constant, offering stability to borrowers.
Explanation:
Fixed rate loans have a set interest rate that remains constant throughout the loan term. Unlike adjustable-rate loans where the interest rate can fluctuate based on market conditions, fixed-rate loans provide stability and predictability to borrowers.
For example, a 30-year fixed-rate mortgage will have the same interest rate for the entire 30-year period, ensuring that the monthly payments remain consistent.
Choosing a fixed-rate loan can be beneficial for individuals seeking to lock in a specific interest rate and avoid potential increases in payments due to interest rate changes.
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