What term is used for compensation for the use or forbearance of money?

The term "interest" refers to compensation that is paid for the use or forbearance of money. When an individual borrows money, the lender charges interest as a cost for allowing the borrower to use that money for a specified period. This is essentially a fee for the risk taken on by the lender as well as the time value of money. Interest can accrue on loans and borrowings, and it is typically expressed as a percentage of the principal amount, which is the original sum of money loaned or invested.

Principal refers to the original amount of money that is borrowed or invested, but it does not encompass the cost associated with borrowing that money over time. Capital refers to financial assets or resources needed to fund a business; while dividends are payments made to shareholders from a corporation's profits, they do not relate to the borrowing or lending of money. Thus, "interest" is the most fitting term to describe compensation for the use or delay in repayment of money.