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Interest

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A comprehensive term to describe any right, claim, or privilege that an individual has toward real or personal property. Compensation for the use of borrowed money.

There are two basic types of interest: legal and conventional. Legal interest is prescribed by the applicable state statute as the highest that may be legally contracted for, or charged. Conventional interest is interest at a rate that has been set and agreed upon by the parties themselves without outside intervention. It must be within the legally prescribed interest rate to avoid the criminal prosecution of the lender for violation of usury laws.

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