Business glossary
Finance charge
The total cost a borrower pays for credit, including applicable interest and fees.
Example
A loan or credit agreement may include interest and qualifying fees. The finance charge describes the cost of that credit under the agreement and applicable disclosure rules.
How it differs from related terms
A finance charge is not automatically the same as a late invoice fee. Interest rate, APR and total finance charge answer different questions. Use the lender's actual disclosures when comparing credit costs.
Frequently asked questions
What is an example of finance charge?
A loan or credit agreement may include interest and qualifying fees. The finance charge describes the cost of that credit under the agreement and applicable disclosure rules.
How should finance charge be interpreted?
A finance charge is not automatically the same as a late invoice fee. Interest rate, APR and total finance charge answer different questions. Use the lender's actual disclosures when comparing credit costs.