Interest rate is the percentage charged by a lender on the principal amount or earned on an investment.
Detailed Explanation
An interest rate represents the cost of borrowing money or the return earned on an investment. It is usually expressed as an annual percentage. Interest rates can vary based on loan type, tenure, credit score, and market conditions.
Example
"A personal loan with a 12% annual interest rate means you pay 12% of the principal as interest each year."