interest

A charge that is applied to those that have taken a loan or for those that have made a loan. The profit made from invested capital.

In the business world, interest is usually referred to the amount of extra money that one has to pay on a loan or, on the other hand, the amount of money one receives for having made a loan.

This is normally in the form of a percentage of the total loan. This is where the term “interest rate” comes from. interest is usually increased on a late payment. Also, the term interest can be used in sense of economic income that is obtained after a period of time for investing in capital. There are two general types: simple interest (interest on capital without taking into account the gains) and compound interest (interest on capital where the gains are accumulated to generate more and more).

Lastly, interest can be used to describe (partial) ownership or economic participation in a business. If, for example, a person has a 5-10% interest in a company or more is said to hold a significant interest in that company.

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