# Interest Factor

Definition

- The decimal equivalent for an interest rate on a unit amount for a time period. It is computed by interest rate divided by number of days in basic year times the number of days accrued.

**Synonyms**

interest rate factor, calculation

## Related Terms and Acronyms

- Annual Percentage Rate (APR) — Acronym,
**Very Important**,- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.

➥ A number used to compare costs associated with mortgage loans and other forms of financing. - Bank — Definition,
- An institution that acts as a financial intermediary by receiving money from depositors and lenders and also lending to borrowers.

- Compounding Method — Definition,
- Used in Bank rate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.

- Interest (IN, int) — Acronym & Abbreviation,
- Money paid for the use of borrowed funds, usually expressed as an annual percentage.

➥ Bank account transaction code. - Interest Adjustment Date — Definition,
- The date one month prior to the beginning of amortization when accrued interest computed on the monies advanced becomes due.

- Interest Rate (IR) — Acronym,
**Very Important**,- The rate a lender charges an individual to borrow money.

- Interest-Crediting Methods — Definition,
- A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.

- Lender — Definition,
- The bank or mortgage company offering the loan.

- Loan — Definition,
- Letting another party use something of value temporarily.

- Money Factor — Definition,
- A leasing term that expresses the cost of borrowing. It is similar to the interest rate paid on a conventional car loan, but it is expressed as a difficult-to-understand fraction. To convert the money factor to a recognizable interest rate, multiply it by 24. For example, a money factor of .00345 x 24 = 9 percent interest. The money factor is negotiable, and consumers who lease a new car should look for a money factor close to the current interest rate charged for new-car loans.

- Mortgage (mtg) — Abbreviation,
**Important**,- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.

- Per Diem Interest — Definition,
- Interest that is charged daily; usually refers to the partial month's interest that the buyer pays on the mortgage covering the period from the day of closing to the end of the month.

- Periodic Rate — Definition,
- The interest rate in relation to a specific amount of time. For example, the monthly periodic rate is the cost of credit per month whereas the daily periodic rate is the cost of credit per day.

- Pre-paid Interest — Definition,
- Interest that a borrower pays before it is due, usually to save taxes.