Comments on: Fixed or floating

Question: Fixed or floating

bjork24 — Thu, 28 Aug 2008 11:17:50 -0800

Prime rate prognosticators: if you had a choice between a five-year business loan at a fixed 7.5% or floating one point above prime, which would you go with?

By: ikkyu2

ikkyu2 — Thu, 28 Aug 2008 11:30:41 -0800

Fixed. Prime is what, 5% right now, and the Fed just signaled that rates will be going up in the near future.

By: anadem

anadem — Thu, 28 Aug 2008 11:36:06 -0800

Fixed. 7.5% is an OK rate. Do you expect rates to fall? I don't.

By: bjork24

bjork24 — Thu, 28 Aug 2008 11:43:31 -0800

That was my initial feeling too. I didn't know what the prime might be doing over the next few years, so I thought I'd ask. Thanks!

By: JohnnyGunn

JohnnyGunn — Thu, 28 Aug 2008 11:54:56 -0800

Fixed. Rates will rise. Just my opinion.

By: mullacc

mullacc — Thu, 28 Aug 2008 13:07:44 -0800

Are we supposed to assume all the other terms of the loan are equal? Same collateral and covenants? Same closing fees?

If all else is equal, probably the fixed rate.

By: bjork24

bjork24 — Thu, 28 Aug 2008 13:55:27 -0800

All else is equal.