I still remember when my brother explained “what is interest” while lending me Rs. 50 for chocolate when we were kids. He told me that interest is the price you pay for borrowing money or the cost you charge for lending money. Interest is usually reflected as an annual %ageage of the loan’s amount. This %age is referred to as the interest rate on the loan.
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For instance, when you deposit your money in a savings account in a bank, then that bank will pay you interest. The bank pays you for holding and using your money to invest in other transactions. On the other hand, if you borrow money to buy an expensive item, the lender will charge you interest besides the amount you borrowed.
Now you can answer if someone asks you “what do you mean by interest.”
Pay Rent using Credit Card through NoBroker and Get Assured Rewards! What is Interest RateIf you borrow some money, then the interest rate is the amount your lender will charge you. It is a %age of the amount loaned. The interest rate on a loan is generally noted on an annual basis referred to as the APR (annual percentage rate).
An interest rate can also apply to the amount earned at a credit union or a bank from a CD (certificate of deposit) or a savings account. Annual percentage yield (APY) refers to the interest earned on these deposit accounts.
Now you know what is meant by interest rate.
If you are planning to take a home loan, then your bank/lender will also charge you interest. If you want to check whether you’re eligible for a home loan, then you can use this home loan eligibility calculator:
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I hope now you know what is interest rate.
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Authors Of The Question
What is interest?
Hari
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1 Answers
2 Year
2022-05-09T19:34:38+00:00 2022-05-11T19:03:32+00:00Comment
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