loan-interest

Vocabulary Word

Definition

Loan-interest is the money you have to pay on top of what you borrowed, like rent on the money. So, when you take a loan, you return the loan amount plus the interest.

Examples in Different Contexts

In consumer credit, 'loan interest' refers to the cost of borrowing money, which is expressed as a percentage of the loan amount. A financial educator might explain, 'Loan interest is how lenders make a profit; understanding this can help you choose the most cost-effective loan.'

Practice Scenarios

Business

Scenario:

The cost of capital has increased due to changes in the economic environment. We need to consider alternatives for funding.

Response:

Given the expensive loan-interest, perhaps we should explore equity funding instead of debt.

Public-Policy

Scenario:

Our economy has been sluggish recently. Should we consider implementing policies to encourage borrowing and investment?

Response:

Yes, if we decrease the loan-interest rates, it might encourage businesses to borrow and invest more, thereby stimulating economic growth.