Interest that must be repaid on borrowed money is called what?

Interest that must be repaid on borrowed money is called what?

• A. Interest owing
• B. Interest
• C. Fees
• D. Principal

Answer: (A)

Interest is the price you pay for borrowing money. When you have a loan, you repay both the amount borrowed (the principal) and the interest that has accrued. The phrase that best matches “the interest that must be repaid on borrowed money” is interest owing, which refers to the amount of interest you still owe. This is different from the principal (the original borrowed amount) and from fees (additional charges that are not the interest). For example, if you borrow $1,000 at 5% interest for a year, the interest owing for that year is $50, which is the cost of borrowing that you must repay, in addition to returning the $1,000 principal.

Interest is the price you pay for borrowing money. When you have a loan, you repay both the amount borrowed (the principal) and the interest that has accrued. The phrase that best matches “the interest that must be repaid on borrowed money” is interest owing, which refers to the amount of interest you still owe. This is different from the principal (the original borrowed amount) and from fees (additional charges that are not the interest). For example, if you borrow $1,000 at 5% interest for a year, the interest owing for that year is $50, which is the cost of borrowing that you must repay, in addition to returning the $1,000 principal.