Fixed or floating

August 28, 2008 11:17 AM

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?
posted by bjork24 to Work & Money (6 answers total)

Fixed. Prime is what, 5% right now, and the Fed just signaled that rates will be going up in the near future.
posted by ikkyu2 at 11:30 AM on August 28, 2008

Fixed. 7.5% is an OK rate. Do you expect rates to fall? I don't.
posted by anadem at 11:36 AM on August 28, 2008

Response by poster: 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!
posted by bjork24 at 11:43 AM on August 28, 2008

Fixed. Rates will rise. Just my opinion.
posted by JohnnyGunn at 11:54 AM on August 28, 2008

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.
posted by mullacc at 1:07 PM on August 28, 2008

Response by poster: All else is equal.
posted by bjork24 at 1:55 PM on August 28, 2008