<p>The Interest Rate is a more general term, and can cover all shorts of financial transactions where one expects by a contractual clause to get their money back plus "a little something" (I am not referring to the expected profit from an investment, where the "little something" is not a contractual obligation).</p>

<p>So you can talk about "the interest rate of a loan" but also of the "interest rate of a deposit in the bank".  </p>

<p>The Borrowing Rate specifically refers to the Interest Rate that the entity under consideration (a business, a public sector, or an individual) has to accept to pay as this extra little something if they want to borrow funds.</p>

<p>So the "borrowing rate" is an "interest rate" - one among many kinds of interest rates.</p>

CC BY-SA 3.0
2017-03-28T20:02:35.883Z
thank you for reply Alecos but i was asking about the DIFFERENCE and not definition of each term.
Timon
CC BY-SA 3.0
2017-03-28T20:19:45.763Z
I would think that what I wrote shows what difference is there between them. And why are you writing "difference" in capital letters?
Alecos Papadopoulos
CC BY-SA 3.0
2017-03-28T20:21:28.603Z
@Timon But anyway I added a little something. But that's all there is to it.
Alecos Papadopoulos
CC BY-SA 3.0
2017-03-28T20:46:47.083Z
to emphasize the meaning of my message. Anyway, thank you again for your time for me.
Timon
CC BY-SA 3.0
2017-03-28T19:14:05.747Z
2017-03-28T20:21:03.837Z
2017-03-28T20:21:03.837Z
Alecos Papadopoulos
<p>I have never studied economics so the question might be very basic one and would need understandable answer: I would like to know the difference between Interest Rate term and Borrowing Rate term? As far as I understand the Borrowing Rate means when some company borrows money from the bank to pay for some internal staff needed to do their work (e.g. manufactury to buy some materials to produce their own products). Then company returns the money to the bank but with little additional fee and this additional fee is Borrowing Rate in % unit. Please confirm if this is correct. Even if it is, I still don't know the DIFFERENCE between Borrowing Rate and Interest Rate.</p>

<finance><accounting>
Interest Rate vs. Borrowing Rate - Difference
Timon
# Interest Rate vs. Borrowing Rate - Difference

(Asked by: username_0 on 2017-03-28)

I have never studied economics so the question might be very basic one and would need understandable answer: I would like to know the difference between Interest Rate term and Borrowing Rate term? As far as I understand the Borrowing Rate means when some company borrows money from the bank to pay for some internal staff needed to do their work (e.g. manufactury to buy some materials to produce their own products). Then company returns the money to the bank but with little additional fee and this additional fee is Borrowing Rate in % unit. Please confirm if this is correct. Even if it is, I still don't know the DIFFERENCE between Borrowing Rate and Interest Rate.

**Tags:** finance, accounting

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## 1 answers

### Answer by username_1 on 2017-03-28. Score: 1

The Interest Rate is a more general term, and can cover all shorts of financial transactions where one expects by a contractual clause to get their money back plus "a little something" (I am not referring to the expected profit from an investment, where the "little something" is not a contractual obligation).

So you can talk about "the interest rate of a loan" but also of the "interest rate of a deposit in the bank".

The Borrowing Rate specifically refers to the Interest Rate that the entity under consideration (a business, a public sector, or an individual) has to accept to pay as this extra little something if they want to borrow funds.

So the "borrowing rate" is an "interest rate" - one among many kinds of interest rates.

> **Comments:**
> **username_0**: thank you for reply Alecos but i was asking about the DIFFERENCE and not definition of each term.  
> **username_1**: I would think that what I wrote shows what difference is there between them. And why are you writing "difference" in capital letters?  
> **username_1**: @Timon But anyway I added a little something. But that's all there is to it.  
> **username_0**: to emphasize the meaning of my message. Anyway, thank you again for your time for me.  

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