bow tie loan

Definition

A short-term, variable-rate loan in which interest payments above a certain rate are deferred until the maturity date. For example, an individual might take out a bow tie loan with an upper limit on the interest rate at 20%. Interest on the loan will fluctuate with the market, but if interest rates go above 20% the borrower will not have to pay the amount over 20% until the loan is mature.
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Bouvet Is Krone box