A letter of interest is actually a prospecting letter that you send to inquire about potential positions rather than to apply for a specific one. It is sometimes confused with a cover letter, which is a letter that you send along with a resume to apply for a specific job posting.
The main purpose of a letter of interest is to inquire about job opportunities with potential employers who may or may not have posted any job openings. Sending this type of letter is a good way to show initiative to a prospective employer -- and gain initial footing in a fresh or pending job search. In smaller companies, a letter of interest may get the attention of a company president or hiring manager who might decide to meet you just to talk and see what you have to offer.
The target of a letter of interest is ideally the hiring manager who leads a company or department in which you have a special interest. It only makes sense to use this prospecting tool if you have a strong desire to work for the recipient or find out about opportunities with the company or within a specific department. Otherwise, you might as well network and review job postings to pursue career opportunities that are already posted and available.
A letter of interest appears somewhat similar to a cover letter at first glance. In fact, colleges and employers sometimes use these terms synonymously. However, a letter of interest usually includes more information about you as the candidate, whereas a cover letter centers more on the job and your qualifications for that job. In a letter of interest, you typically would include your motive for sending the letter, express your interest in the company, note your current education or employment status and request a meeting or interview to discuss opportunities with the company. A professional format, proper header and signature lines, accurate spelling and grammar are all essential if you want serious consideration.
Company versus Job
A key difference with the letter of interest versus a cover letter is its emphasis on a potential employer, not a specific position. While you may convey your qualities and career interests, you write the letter based on a desire to work for a particular employer. It is more of an exploration of opportunities based on your familiarity, comfort and appreciation for what a company does, its culture and other factors you admire.