ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Interest rate is the amount charged over and above the principal amount by the lender from the borrower. In terms of the receiver, a person who deposits money to any bank or financial institution also earns additional income considering the time value of money, termed as interest received by the depositor.

Detailed explanation-2: -The concept of a loan is pretty straightforward: first you borrow money, and then you repay it. But the amount that you must repay is more than the amount you borrow. This is due to interest and fees, which is what a lender charges you for the use of its money. It is also referred to as a finance charge.

Detailed explanation-3: -Annual Percentage Rate (APR) is the interest charged for borrowing that represents the actual yearly cost of the loan expressed as a percentage.

Detailed explanation-4: -An interest rate tells you how high the cost of borrowing is, or high the rewards are for saving. So, if you’re a borrower, the interest rate is the amount you are charged for borrowing money, shown as a percentage of the total amount of the loan.

Detailed explanation-5: -Interest-The price that people pay to borrow money. When people make loan payments, interest is a part of the payment. Interest Rate-The cost of borrowing money expressed as a percentage of the amount borrowed (principal).