Which term denotes interest that must be repaid on borrowed money?

Which term denotes interest that must be repaid on borrowed money?

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

Answer: (B)

Interest is the charge you pay for using borrowed money, but the specific amount that must be repaid at a given time is the interest owing. This term emphasizes the obligation to pay the accrued borrowing cost that has built up on the loan. In other words, while the rate or concept of interest is about the cost of borrowing in general, interest owing refers to the actual amount currently due to the lender. The borrowed principal is the amount originally borrowed, and fees are separate charges; together with interest, they make up the total repayment, but they are not the same as the interest that must be repaid.

Interest is the charge you pay for using borrowed money, but the specific amount that must be repaid at a given time is the interest owing. This term emphasizes the obligation to pay the accrued borrowing cost that has built up on the loan. In other words, while the rate or concept of interest is about the cost of borrowing in general, interest owing refers to the actual amount currently due to the lender. The borrowed principal is the amount originally borrowed, and fees are separate charges; together with interest, they make up the total repayment, but they are not the same as the interest that must be repaid.