Rolling Money Market Loan

from Wikipedia, the free encyclopedia
Bundesbank short-term money market rates since 1980

A rolling money market loan is a medium to long-term loan in which the loan debt can be repaid flexibly at the end of one of the fixed interest periods within the contract period. Such a loan is better known as a roll-over loan .

Reciprocally to the investment in a money market account or in money market papers that are available to the saver for a short time, the money market loan is quickly available to the borrower and can be redeemed quickly. The interest rate for these short-term transactions is based on the money market interest and is therefore typically cheaper. The reference rate for interest rate changes is generally EURIBOR for loans in euros, and LIBOR for loans in Swiss francs - each with a term corresponding to the fixed interest rate. The burden during the term of the loan is limited to the payment of the interest , the amount of which is variable, however, as the interest rate is adjusted to the market at the end of the fixed interest period (usually 1, 3, 6 or 12 months).

As a rule, money market loans are secured with an assignment of claims from endowment insurance , private pension insurance , home loan and savings contracts or investment funds .

The rolling money market loan became known because the former Federal President Christian Wulff, during his time as Prime Minister of Lower Saxony between 2008 and 2011, financed a three-stage house purchase through a personal loan from a friend, a rolling money market loan and a long-term real estate loan.

See also

Web links