Loans & credit
Interest
The extra cost you pay a lender for borrowing money, usually a yearly percentage.
Interest is the price of borrowing. It is what the lender earns for giving you money now.
On loans, interest works against you. On savings and investments, it works for you.
The rate matters enormously over long tenures, so shaving even 0.5% off a home loan saves lakhs.
For example
A 1% higher rate on a ₹40L, 20-year home loan can mean paying several lakhs more in total interest over the life of the loan.