A loan by having an interest rate that changes periodically. In general speaking a variable rate loan is linked to some major benchmark rate; as an example the interest rate may be confirmed as "LIBOR + 1%." The loan may or may not have a cover on what much the interest rate can rise or fall or on what often the interest rate may change. Very frequently the initial interest rate for a variable rate loan is less than that for a fixed rate loan. This enables more visitors to qualify for a loan however this sort of loan could be risky since the interest rate and which means monthly payment can rise unexpectedly.