What's a finance charge on a car loan?

I've heard the term "finance charge" thrown around when it comes to borrowing and car loans. What does it mean?

Answer
Put simply, a finance charge is the cost of borrowing money. With a car loan, the finance charge consists of the periodic payment of interest on the outstanding balance, as well as any application fees, filing fees, etc.
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Jim Donaher
Answered on Mar 08, 2021
Jim Donaher is a freelance writer and manager with over 35 years' experience in the insurance, banking, and investment management businesses. He provides expertise on a range of topics and is able to explain complex industry information in layman's terms. Jim is the author of two books, including Call Him, He's Home: A Guide to Prayer for Regular People and Then Larry Smiled, a novel about life, death, accountability, and salvation. Taormina, Sicily is his happy place!
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