What is Finance Charge On A Loan?
Category: Finance
1Definition
The total cost of borrowing money including interest and all fees.
2Context
Required disclosure on loans. Helps compare true costs between different lenders.
3Example
A loan with 6% interest plus $500 in fees has a higher finance charge than one at 7% with no fees.
⚠Common Trap
Compare finance charges, not just interest rates, when shopping for loans.
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