Interest payments are the amounts paid by a borrower to a lender for the use of borrowed money. This payment is typically expressed as a percentage of the principal amount, which is the original sum borrowed. Interest can be calculated in various ways, such as simple interest or compound interest, depending on the terms of the loan. These payments are common in various financial products, including mortgages, personal loans, and credit cards. They serve as compensation for the lender's risk and the opportunity cost of lending money. Regular interest payments are essential for maintaining good credit and avoiding penalties.