Costs of a Term loan The interest rate is higher than on a short- term loan to the same borrower( 25 to 50 basis points on a low risk borrower) Interest rates are either (1)fixed or(2) variable depending on changing market conditions-possibly with a floor or ceiling Borrower is also required to pay legal expenses (loan agreement and a commitment fee(25 to 75 basis points)may be imposed on the unused portion 21-421-4 Costs of a Term Loan The interest rate is higher than on a short￾term loan to the same borrower (25 to 50 basis points on a low risk borrower). Interest rates are either (1) fixed or (2) variable depending on changing market conditions -- possibly with a floor or ceiling. Borrower is also required to pay legal expenses (loan agreement) and a commitment fee (25 to 75 basis points) may be imposed on the unused portion