You benefit from the flexibility of a variable interest loan, but enjoy budgetary certainty for the entire term. When you enter a payer swap, there is no cash flow. Cash only flows within the scope of the variable interest loan. The variable interest loan is independent of the fixed-rate payer swap. Once the contract has been concluded for the swap, the following payments are made:
 

You enjoy the flexibility of a variable interest loan, and continue to benefit from low or falling interest rates, but limit the risk associated with rising rates. You pay a one-time premium (insurance premium) at the beginning of the term of the cap. When you enter the cap, there is no cash flow. Cash only flows within the scope of the variable interest loan. The variable interest loan is independent of the cap. If the interest rate should exceed the agreed cap, you receive a compensation payment. The graphic shows how this works:
 

With an interest rate collar, you hedge your variable interest loan against raising rates by means of a cap. And you only benefit from low or falling rates to an agreed floor. This creates a corridor of variable interest rates. You pay a one-off premium (insurance premium) at the beginning of the agreed term of the collar. When you enter an interest rate collar, there is no cash flow. Cash only flows within the scope of the variable interest loan. The variable interest loan is independent of the collar.