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Definition
Interest in arrears charges for the borrowing once the period has passed, so you pay for money you have already had the use of. It is the usual basis for term loans and most facilities, and is marginally cheaper than interest in advance for the same rate.
In plain terms
You use the money first and pay the interest after — the normal, fairer way round.
Why it matters for your company
Most facilities charge in arrears; if one charges in advance, factor the slightly higher cost. See interest in advance and accrued interest.
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