When you borrow money, you will have to pay it back with interest. There are two options available to calculate the amount of interest the loan will cost. These are: fixed and variable. A fixed interest rate means that the rate does not change for the entire period of repayment. This avoids the risk associated with variable interest rates that change when the Reserve Bank changes the REPO rate. This is the rate that the central bank of a country lends money to other banks and is used as a benchmark by lenders to calculate the interest charges for the loans they approve. A variable interest rate means that the rate will change over the period of repayment, based on changes in the REPO rate.