The English term "debt" was first used in the late 13th century. The term "debt" comes from "dette, from Old French dete, from Latin debitum "thing owed," neuter past participle of debere "to owe," originally, "keep something away from someone," from de- "away" (see de-) + habere "to have" (see habit (n.)). Restored spelling after c. 1400. The related term "debtor" was first used in English also in the early 13th century; the terms "dettur, dettour, from Old French detour, from Latin debitor "a debter," from past participle stem of debere;...The -b- was restored in later French, and in English c. 1560-c. 1660." In the King James Bible, various spellings are used; the spellings "detter three times, debter three times, debtor twice and debtour once."
Interest is the fee paid by the borrower to the lender. Interest is calculated as a percentage of the outstanding principal, which percentage is known as an interest rate, and is generally paid periodically at intervals, such as monthly or semi-annually.
Interest rates may be fixed or floating. In floating-rate structures, the rate of interest that the borrower pays during each time period is tied to a benchmark such as LIBOR or, in the case of inflation-indexed bonds, inflation.
There are many different conventions for calculating interest. Depending on the terms of the debt, compound interest may accumulate at a specific interval. In addition, different day count conventions exist, for example, sometimes each month is considered to have exactly thirty days, such that the interest payment due is the same in each calendar month. The annual percentage rate (APR) is a standardized way to calculate and compare interest rates on an annual basis. Quoting interest rates using APR is required by regulation for most loans to individuals in the United States and United Kingdom.
For some loans, the amount actually loaned to the debtor is less than the principal sum to be repaid. This may be because upfront fees or points are charged, or because the loan has been structured to be sharia-compliant. The additional principal due at the end of the term has the same economic effect as a higher interest rate.