Legal Definitions - rate of interest

Definition: The rate at which interest is charged or paid on a loan or investment.

Example: If you borrow $1000 from a bank at an interest rate of 5%, you will have to pay back $1050 at the end of the loan term.

Explanation: The example shows how the rate of interest affects the amount of money that needs to be paid back on a loan. In this case, the interest rate of 5% means that the borrower has to pay an additional $50 on top of the original loan amount of $1000.