Fixed rate loan

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A fixed rate loan is one that keeps the same interest rate throughout the life of the loan. Home loans used to be fixed rates loans, although adjustable rate loans began to be offered and became more popular over time.

The advantage of a fixed rate loan is that it usually becomes easier to afford over time since income will usually increase but the loan amount does not.

(Note: For loans that also include the annual property tax, it is possible for a loan to go up over time as the assessed value of the house may increase and therefore the annual property tax due.)

Fixed rate loans are still popular for homes and also for automobiles.