Question

With respect to a personal loan, the finance charge a borrower pays is _____.
a.
an income tax on the loan
b.
the extra money he or she pays in interest
c.
usually a one time $20 application processing fee
d.
something the borrower can opt out of with good credit

Answer 1

b. the extra money he or she pays in interest

Explanation: The finance charge is the cost of borrowing — interest and other fees charged by the lender — not an income tax, a fixed $20 fee, nor something a borrower can simply opt out of.