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Trading and Investment Terms

Interest Rate

The interest rate is typically noted on an annual basis known as the annual percentage rate (APR).
An interest rate is the percentage of principal charged by the lender for the use of its money. 
The principal is the amount of money loaned. 
Since banks borrow money from you, they also pay you an interest rate on your money.

Interest rates are commonly used for personal loans and mortgages, though they may extend to loans for the purchase of cars, buildings, and consumer goods.

Lenders typically offer lower interest rates to low-risk borrowers and higher rates to high-risk borrowers. 

While lenders typically set their rates, competition for borrowers means lenders within a certain area usually offer comparable numbers.
 

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