What is an interest rate?
Interest rate: An interest rate is the price a lender charges to borrow money, stated as a yearly rate on the balance you owe. It does not include most loan fees.
The interest rate determines how much interest is added to your balance over time. Lenders set it based on factors such as your credit history, income, the loan amount and the term.
Interest rates can be fixed, staying the same for the life of the loan, or variable, changing with a benchmark rate.
When you compare offers
The interest rate is only part of the cost. Check the APR, which also reflects required fees, before you compare offers.
Related guides
- Comparing Offers: APR, Fees and Term
A plain-language guide to the three numbers that matter most when comparing loan or credit offers — APR, fees and term length.
- Fixed vs. Variable Rates When Refinancing Student Loans
How fixed and variable rates work on a student loan refinance, the trade-offs of each, and the questions worth asking before you choose — plus what refinancing federal loans gives up.
This glossary is for general educational purposes and isn't financial, legal or insurance advice. Lendara is not a lender and does not make credit decisions. Lendara is a free online marketplace that connects you with participating lenders and providers, who set their own eligibility rules, rates, fees and terms. Lendara may receive compensation from partners, which may affect which offers appear and their order.