Interest rate provisions.

CFR · 2024-01-01 · US · Title 7

Interest rates, interest rate caps, and incremental interest rate adjustment limitations on a guaranteed loan are negotiated between the Lender and the borrower. The interest rate for a guaranteed loan can be either fixed or variable, or a combination thereof, as long as it is a legal rate. Interest rates cannot be more than those rates the lender customarily charges its borrowers for non-guaranteed loans in similar circumstances in the ordinary course of business. The Agency encourages each lender to use the secondary market and pass interest-rate savings on to the borrower. (a) (b) (1) The variable interest base rate must be specified in the promissory note along with any interest factors ( (2) The lender may adjust the variable interest rate at different intervals during the term of the loan, but not more often than quarterly. (3) The lender must incorporate, within the variable rate promissory note, a provision for adjustment of payment installments to fully amortize the loan by its maturity date. (c) (d)

official document · source cfr-2024 · id 7:§ 5001.401