DEFINITION of 'Personal Interest'

Interest that taxpayers pay on personal and consumer loans. Personal interest is nondeductible, and the rates charged for this type of interest are often quite high. Personal interest that is received by the lender is usually reported on a cash basis.

BREAKING DOWN 'Personal Interest'

Personal interest includes interest on car loans, credit cards, loans for appliances and furniture and interest on loans made by one person to another.

Many consumers elect to take out lines of credit on the equity in their homes so that they can pay off their personal-loan balances and deduct the interest on their lines of credit instead.

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RELATED FAQS
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    Find out whether interest on personal loans is tax deductible and what types of loan interest can be used to reduce your ... Read Answer >>
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