Index:

Different indices track the economy in different ways and will thus affect your loan differently. The most common indices (but by no means the only ones) are the 1-year Treasury Bill rate, the 6-month LIBOR rate, the COFI (Cost of Funds Index), 1-year CMT rate (Constant Maturity Treasury - average of the 1-yr T-Bill for the last year), the prime rate, and the 6-month CD rate. Each index has its advantages and drawbacks, and is used in different situations.