Answer:
A variable rate loan is a loan that has a benchmark or index rate, plus or less some points, and varies according to the index rate.
For example, one of the most common index rate is the LIBOR, acronym for Londor Interbank Offered Rate. A bank can offered a loan consisting of a rate of LIBOR plus 1.5 points.
Suppose the first month of the loan, LIBOR is 2.00%, therefore, the total variable rate of the loan is 3.15%. Then, in the second month, LIBOR goes down to 1.00%, therefore, now the variable rate of the loan is 2.15%. This is an example of a variable rate loan.
