Interest cost refers to the total amount of interest that a borrower pays on a loan or debt throughout its duration. 

This includes the interest paid in addition to the repayment of the principal amount borrowed. However, any negative points or rebates received by the borrower should be deducted from the interest cost, as they essentially refund future interest payments. 

In the context of consumer financial obligations like mortgages, student loans, auto loans, and credit cards, interest cost plays a significant role. Corporate borrowings, such as commercial paper, lines of credit, long-term loans, bonds, and lease costs, are also influenced by interest cost.

When considering interest cost, it's crucial to understand how lenders calculate the interest that accrues on the loan. Interest may accrue on a daily, monthly, or quarterly basis, and some loans may have an initial period where interest cost is deferred and added to the outstanding balance.

Interest cost can be fixed for the duration of the loan or variable, tied to a reference security like the 10-year U.S. Treasury bond or based on a benchmark interest rate such as LIBOR. 

Lenders often include provisions in variable rate loans to protect against extreme fluctuations in interest costs, such as interest rate caps and floors.

In terms of taxes, certain types of interest costs are treated favorably in many jurisdictions. For example, interest payments on home mortgages and student loans may be eligible for tax deductions, subject to specific limitations and exclusions. Similarly, corporations may benefit from tax deductions on interest payments on debts like loans and bonds.

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