Interest

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The term interest is used to describe the cost of using money, a right, share, or title in property.

Loans

Interest is a loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount of the loan. It’s expressed as an annual rate in terms of a percent of the principal (the amount owed).

Additionally, interest is the price paid for borrowing money. It is expressed as a percentage rate over a period of time. Interest rates may be fixed, meaning the rate is set and will not change, or maybe variable or “floating,” meaning the rate may move higher or lower over time.