We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Fixed Charge?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

The term “fixed charge” is used in two different ways in the financial community. In the first sense, it refers to a predictable recurring expense that occurs at a regular interval. It can also mean a lien on a fixed asset for the purpose of securing a loan. The type of fixed charge meant is usually clear from the context of the discussion.

In the first case, a fixed charge will always be the same amount, and will happen on a schedule. Rent is a classic example of a fixed charge. People know that the same amount of money will be due on the same date every month. This contrasts with other expenses that may be more flexible, including charges of varying amounts, like utilities, where there is no way to know ahead of time about the amount of the charges.

A business can factor this into budgeting decisions to make sure it has enough money to address these expenses. In addition, it also makes estimates for floating expenses. These estimates are based on historic performance and general trends in the industry to help the business arrive at an accurate estimate. Companies can use things like old utility records and maintenance logs to see when they will incur expenses for various activities.

The fixed charge can also take the form of a lien. In this case, a creditor requires a security interest in a fixed asset in order to provide a loan. The classic example is a mortgage. Until the debtor repays the mortgage, the creditor retains an interest in the property. If the debtor reneges on the deal, the creditor can seize the property and sell it to recover the cost of the loan. It is also possible to have a floating charge, where the interest is not in a fixed asset.

Fixed charges require some caution. Creditors check the title to the asset first to make sure there is not another creditor with precedence, as this could cause a problem if the debtor goes into default. Debtors need to be careful when the debt is repaid, to confirm that the credit's lien is lifted. If it is not, the debtor can have trouble selling the property in the future because the buyer will not want a property with a lien on it. People who are not sure about whether creditors have released their financial interests can conduct a title search to see if any liens come up.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.