Definition: Interest is a fee that a lender charges in order for a borrower to use their money. Interest is expressed in terms of "percent of principal" (for instance, if a loan is $1,000 and the interest is $100, then the interest is 10%). Various factors influence interest; a borrower with perfect credit will get charged a lower interest rate because the risk of default is much lower.
The best way to think of interest is to consider it the cost of renting money from someone who has it.
