A type of loan agreement in which the borrower pays a fee, known as a cap, in order to guarantee that the interest rate of the loan is kept below a pre-determined limit. Even if market interest rates rise exponentially, the rate of the loan cannot be bumped past the agreed upon maximum rate.

Previous Terms: 1031 Exchange, 1035 Exchange, AARP, Abeyance, Abstraction Principle, Accelerated Amortization, Acceptance Credit, Acceptance of a Bill of Exchange, Accommodation Bill, Accommodation Endorser