Interest is the amount that is paid by an individual for borrowing money from someone else.
This is the extra amount that has to be paid to the lender for giving the money.
For example if there is a loan taken for Rs 10,000 then this is the capital amount.
If the individual pays Rs 10,800 back to the borrower then the extra Rs 800 is the interest.
This becomes the cost for the borrowing so it is an important factor to consider,