What is the term for money paid for the use of borrowed capital?

The term for money paid for the use of borrowed capital is interest. Interest represents the cost incurred by borrowers for the privilege of utilizing someone else's capital or money temporarily. It is typically expressed as a percentage of the principal (the amount borrowed) and is a fundamental concept in finance and lending. This cost reflects the risks taken by lenders, the opportunity cost of lending money rather than using it for other investments, and it compensates the lender for the period that the capital is unavailable to them.

In contrast, credit refers to the agreement in which a borrower can use money from a lender with the intention of paying it back later. Profit is the financial return after all expenses, including interest, have been deducted from revenue, while income is a broader term encompassing earnings from various sources and is not specifically tied to borrowed capital. Thus, interest is the most precise term in this context, signifying the specific charge for the use of borrowed funds.