Interest is just the cost of borrowing. If you ask to borrow 10 bucks, I might ask you to pay me back 11. That $1 is the interest.

Interest is usually expressed in annual percentages, like 20% a year. So if you borrow $100, in 1 year you would owe $120. After another year it would be $120*1.2 again, or $144.

But then it gets more complicated, when you factor in compounding. Compounding refers to how many times the interest is calculated. Is it 20% 1 time per year? Or is it 20%/12 each month? Or maybe it's 20%/52 every week. As it turns out, the more times you compound the interest, the more interest you will end up owing annually. So this is an important factor. (Most loans are monthly)