The differences between the amount borrowed and the amount repaid is referred to as _____?

Question:- The differences between the amount borrowed and the amount repaid is referred to as _____?

Answer: Interest

Interest is the cost or the rate of interest charged on money advanced or the amount given by one person to another for the use of amount for a certain period of time. It is normally expressed as the nominal or principal sum –the quantity of cash that was initially borrowed.

Whenever a person or a company has borrowed a loan he is entitled to pay back the borrowed money along with some more percentage of the amount which is charged at an interest rate. Interest can be calculated with reference to the principal sum, which is the specific amount of money referred to in the interest rate and the time over which the interest is paid or the borrowing period.

Interest is one of the very essential factors that applies to credit and financial products like; loans, credit cards, mortgages etc as well as investment among several others. This reflects the amount paid as the cost of capital by the borrowing firm or business and the return on investment earned by a lending firm or the investor.