INTEREST RATE

The amount charged by a lender to a borrower for using assets. Expressed as a percentage of principal, these are usually noted on an annual basis, known as the annual percentage rate (APR). Assets can include cash, consumer goods, or large assets such as building or vehicle. In essence, interest is a rental or leasing charge to a borrower for using an asset. For a large asset such as building or vehicle, this is called lease rate. When the borrower is a low-risk party, they will normally be charged a low interest rate. Conversely, if the borrower is a high-risk party, the rates will be charged higher.

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