Finance Glossary

Interest Rate

The percentage of the loan principal charged by a lender for the use of their money, typically expressed as an annual rate. The interest rate does not include fees, which is why APR is a more complete measure of borrowing cost. In the UK, short-term lenders are subject to an FCA daily interest rate cap of 0.8% per day on the outstanding balance.

Related guides

Apr Explained →

Related terms

APR
Annual Percentage Rate — the true annual cost of borrowing, …
Fixed Rate
An interest rate that stays the same for the full term of th…
Variable Rate
An interest rate that can change during the loan term, typic…
Principal
The original sum of money borrowed, not including interest o…
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