LIBOR (London Interbank Offering Rate)

LIBOR-much like the highly published Prime Lending Rate the London Interbank Offered Rate (LIBOR) is the interest rate that the most creditworthy international banks typically dealing in Euro Dollars charge each other for large loans. LIBOR has become a typical base for other large loans to creditworthy corporate and government borrowers as well. It has become very common to see LIBOR as a base rate that is utilized for loans in excess of one million dollars. In some cases the repayment terms can be interest only. LIBOR, unlike PRIME, can change more fluidly. Potential LIBOR-based borrowers should be very comfortable when choosing this option as monthly payments can vary significantly from month to month or quarter to quarter depending on how your principal and interest payments are structured.