Benefits
Interest is a fee, paid on borrowed capital. Loan assets include money, shares, consumer goods through hire purchase, major assets such as aircraft, as well as factories in whole in financial lease arrangements. The method is calculated on the value of the assets in the same way as the money. Benefits can be thought of as "rent on money". For example, if you want to borrow money from a bank, there are some rates you must pay by how much you want to make a loan. The fee is a compensation to the lender for a previously other useful investment that may have been made with borrowed money. From lenders using assets directly, they are given in advance to the borrower. Borrowers then enjoy the benefits of using assets ahead of the effort needed to get them, while lenders enjoy the benefit of the fees paid by the borrower for that purpose. The amount borrowed, or the value of the asset borrowed, is called principal. The value of the principal is held by the borrower on credit.