Interests on Loans - Income or Expense?

by Santa Betty
(Kenya)

Q: Is interest on loan an income or expense?


A:
Usually, when talking about a loan, we're talking about you or your business taking out a loan. In this case, you or your business pay interest on the loan. In this case the interest is an expense.

If however, your business gives out loans (i.e. you are a bank or a similar financial institution), then you will charge your customer interest on the loan. In this case, the interest is your
income.

Hope that makes sense, good luck!

Best,
Michael Celender

Comments for Interests on Loans - Income or Expense?

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mr
by: jeff

spot on, thanks for that clear and precise explanation

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