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
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