Interest is the money paid by a borrower to the lender for the use of money borrowed.
In other words;
The additional money paid for using other's money is called interest.
Some key things about Interest.
Principal or sum :
|Principal or sum is the money,that borrowed or lent out for a certain period.
|It is the duration of period for which the money is borrowed.
|The sum of Principal and Interest is called Amount.
|Amount = Principal + Interest
Rate of Interest :
|The Interest rate of the principal for a certain period.
|Let, 9% per Annum. |
|It means, the interest on principal of Rs. 100 for one year is Rs. 9.