What "interest" means in finance

Interest is the cost of borrowing money, typically expressed as a percentage of the amount borrowed. It is the compensation that a lender receives for the use of their money, and it is the cost that a borrower incurs for the privilege of borrowing that money. Interest rates are determined by a variety of factors, including the supply and demand for credit, inflation, and the creditworthiness of the borrower. The interest rate can also vary depending on the length of the loan, the type of collateral, and other factors.