Which of the following best defines interest rate?

Interest rate is best defined as the total cost of borrowing expressed as a percentage. This definition accurately captures the essence of an interest rate, which represents the cost incurred by a borrower for the use of borrowed money, typically expressed annually. This percentage is critical as it helps borrowers understand how much they will owe in addition to the principal amount over a specified period, allowing for comparisons between different loan offers and financial products.

In contrast, the other options define related concepts but do not precisely encompass the definition of interest rate. The fee charged by lenders expressed as a flat rate refers to a specific structure of charges and does not account for the variability and calculation based on a percentage of the principal amount. The minimum required payment for loans typically refers to the regular payment amount due on a loan, which may incorporate interest but does not solely define the interest rate. Lastly, the constant repayment amount for a loan may include both principal and interest but does not exclusively define the concept of interest rate itself. Understanding interest rates as a percentage allows for a clearer interpretation of the cost of borrowing, making it a crucial concept in finance.