Interest
Plain definition
Interest is the price of borrowing money — the payment made to a lender for the use of funds over time, usually expressed as a percentage rate.
In economics
Interest is the return to capital as a factor of production and the price that balances saving and borrowing. Central banks use policy rates to influence interest rates economy-wide, affecting investment, consumption, and inflation.
Example
A business borrowing 8,000 per year for the use of that capital.
Common confusion
Interest is not profit: interest is a contractual return to lenders for capital, while profit is the residual left for owners after all costs including interest are paid.