Interest types at a glance

Original (original) interest

Original (original) interest is the income that accrues to a capital owner when he uses his capital in his own company. The prerequisite for its creation is that a return is achieved through the capital employed.

Loan rate

Lending interest is the income that a capital owner receives when he makes his capital (money or real capital) available to another.

Der Leihzins bildet sich auf dem Markt. Seine Höhe richtet sich unter anderem nach supply and demand von Leihkapital. Leihkapital wird auf einer Reihe von Teilmärkten gehandelt, beispielsweise auf dem Geldmarkt (kurzfristige Gelder) und Capital market (langfristige Gelder). Entsprechend unterscheidet man Geldmarktzins und Kapitalmarktzins.

The average interest rate on capital and the average interest rate on loan are seldom the same. Nevertheless, their average heights are interdependent (= dependent on each other). For example, an entrepreneur will only invest as long as his return (interest on the investment) is at least as high as the monetary interest rate. Rising sales prices thus increase the profitability of real capital (capital income) and vice versa, all other things being equal.

Productive Interest and Consumer Interest

In the case of productive interest and consumer interest, the distinction is made according to the use to which the loan capital is allocated and for which the interest is paid.
If the loan capital is used in the company, that is, if it is used for productive purposes, productive interest is paid as compensation for the additional goods and services.

If loan capital is used for consumer purposes (e.g. installment loans), the consumer interest represents the payment for the transfer of purchasing power. The purchasing power transferred to the debtor brings him benefit (he can dispose of consumer goods immediately), for which he receives remuneration The form of the interest to be paid.

Debit interest and credit interest

Debit interest and credit interest are the interest for the credit institutions that they receive in the lending business (interest income) and have to pay in the deposit business (interest expenses). The difference between interest expenses and interest income represents the interest margin of the credit institutions.

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