lending rate

This is the term for the sum of money that a bank charges to a customer for borrowing money.

For example, Meinir wants to buy a new car. She borrows £2000 from the bank at a rate of 5% over a period of 3 years.

We calculate the sum of money the bank charges for lending £2000 like this:

0.05 × 2000 × 3 = 300

Therefore, Meinir has to pay £300 for borrowing £2000.

She will have to pay a total of £2300.