Difference between gross interest and net interest Difference between gross interest and net interest

# Difference between gross interest and net interest

## Basis Gross interest Net interest 1. Definition It is the total amount paid by a borrower to the lender in return of the capital borrowed for a period of time. It is the price paid by a borrower to the lender only for the use of capital. 2. Calculation It can be calculated by summing up net interest and other charges. It can be calculated by deducting other charges from gross interest. 3. Dimension It is a broad concept. It is a narrow concept. 4. Interest rate variation The rate of gross interest differs in the market. The rate of net interest remains almost the same in the market. 5. Use It is a practical concept which is applicable in real life. It is purely a theoretical concept which has no practical application. 6. Determination It is determined by several factors beside demand for and supply of the capital. It is determined by the demand for the capital and supply of the capital.

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