Fixed interest rate refers to the interest rate that is not adjusted during the loan period. In other words, the interest rate is set when the loan contract is signed. No matter how the market interest rate changes during the loan period, the borrower pays interest at a fixed interest rate. Floating interest rate is an interest rate that can be adjusted regularly during the loan period. According to the agreement between the borrower and the lender, the loan term is adjusted according to the market interest rate. At present, according to the loan contract, it is generally adjusted on June 65438+1 October1according to the change of market interest rate.

Advantages and disadvantages of fixed interest rate. Fixed interest rate accounting is simple and convenient for investors and financiers to make capital plans. However, for long-term borrowers and lenders, the risk is greater. In financing, the risk of falling interest rate is due to the fact that after the loan relationship is determined, if the interest rate falls, it means high financing cost for the financier with fixed interest rate. Investment faces the risk of rising interest rate, because if the interest rate rises after the loan relationship is determined, for investors with fixed interest rate, it means that the funds are occupied by low-yield assets.

Advantages and disadvantages of floating interest rate. Floating interest rate provides investors and financiers with the possibility of managing interest rate risk, which is more detailed but complicated in accounting and avoids interest rate risk. Since 1970s, floating interest rates have been adopted more and more, especially in the lending activities of enterprises, because the fluctuation range and frequency of interest rates worldwide have greatly increased. The interest rate of enterprise loans in China now adopts the floating interest rate method, which is approved once a year.