What is the term for the money paid for the use of borrowed money or delaying debt repayment?

The term that describes the money paid for the use of borrowed money or the delay in repaying a debt is known as interest. Interest is essentially the cost of borrowing funds, calculated as a percentage of the principal amount, which is the initial sum of money borrowed or invested. When you take out a loan, the lender charges interest as compensation for the risk they're taking and as a return on their investment.

In financing, interest can be simple or compound, with simple interest calculated only on the principal amount and compound interest calculated on the principal plus any interest that has already been added. Understanding interest is crucial for managing loans and credit effectively, as it affects the total amount you owe and how long it will take to pay off a debt.

The other terms, such as principal, dividend, and capital gains, refer to different financial concepts. Principal is the original sum of money borrowed or invested, dividends are distributions of a portion of a company’s earnings to its shareholders, and capital gains are profits made from the sale of an asset that has increased in value. Each of these terms plays a significant role in finance, but they do not pertain to the cost associated with borrowing money.