Variable rate loans are loans that have an interest rate that will fluctuate over time in line with prevailing interest rates. They generally have lower starting interest rates than fixed rate loans, but the interest rate and payment amounts can change over time. Sometimes they are also known as floating rate loans.
If a variable interest rate goes up, this also raises the monthly payments on the loan and the total interest the borrower will pay. However, variable-rate personal loans often have initial rates below what is offered on a fixed-rate loan.