What type of loan is characterized by interest rates that can change at scheduled times?

The type of loan characterized by interest rates that can change at scheduled times is an adjustable-rate loan. This type of loan is designed with an interest rate that fluctuates based on a specific index, and these adjustments typically occur at predetermined intervals, which can range from months to years. As a result, the monthly payment of the borrower may increase or decrease over time, depending on the changes in the interest rate.

Adjustable-rate loans often begin with a lower initial interest rate, making them attractive to borrowers who prefer lower initial payments. However, as the interest rate can change, borrowers should be aware of the potential for higher payments in the future if rates rise. Understanding this aspect of adjustable-rate loans is essential for borrowers to assess their risk tolerance and financial planning, as well as to navigate market conditions effectively when choosing loan products.