ECONOMICS
CREDIT
Question
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The charge for borrowed money.


Educational loan


Financial aid that does not need to be repaid.


A short term personal loan to purchase a car.

Detailed explanation1: Interest is the monetary charge for borrowing moneygenerally expressed as a percentage, such as an annual percentage rate (APR). Interest may be earned by lenders for the use of their funds or paid by borrowers for the use of those funds.
Detailed explanation2: InterestThe price that people pay to borrow money. When people make loan payments, interest is a part of the payment. Interest RateThe cost of borrowing money expressed as a percentage of the amount borrowed (principal).
Detailed explanation3: Interest is the amount of money a financial institution charges for letting you use its money. The rate of interest can be either fixed or variable. Fixed rate means the interest rate stays the same throughout the term of the loan. Variable rate means the interest rate might change during the loan term.
Detailed explanation4: The formula to calculate simple interest is: principal x rate x time = interest (with time being the number of days borrowed divided by the number of days in a year). If you borrow a $2, 500.00 loan with an interest rate of 5.00% for a period of one year, the interest you owe will be $125.00 ($2, 500.00 x . 05 x 1).