Conversely, when you have savings, you can use them to create value by loaning it out to a bank or investing in a business.
As a result, loans are issued with the expectation that the full value is repaid plus a little more in return to account for the lost value associated with time. The basis is that most people would prefer to be paid today rather than tomorrow that money received in the future is worth less than money received now.
Interest is a strange concept but rooted in a core finance principal called the time value of money.
