What term is used to describe the cost of borrowing money?

• A. Loans
• B. Fees
• C. Interest rates
• D. Mortgages

Answer: (C)

The term used to describe the cost of borrowing money is "interest rates." Interest rates represent the amount a lender charges a borrower for the privilege of using borrowed funds, typically expressed as a percentage of the principal loan amount. This cost compensates the lender for the risk taken and the potential loss of other investment opportunities.

In the context of loans, when an individual or business borrows money, they agree to repay the principal amount along with interest over a specified time period. The interest rate can vary based on the type of loan, the creditworthiness of the borrower, and broader economic conditions, influencing how much a borrower pays in total.

The other terms provided serve different purposes: "Loans" refer to the actual funds borrowed, "fees" may include additional charges associated with borrowing, and "mortgages" are specific types of loans used for purchasing real estate, often involving interest payments as well. Thus, interest rates specifically characterize the cost of borrowing.