Finance Charge


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Finance Charge

The amount owed to a lender by a purchaser-debtor to be allowed to pay for goods purchased over a series of installments, as opposed to one lump sum at the time of the sale or billing.

A finance charge, sometimes called the cost of credit, is expressed as an annual interest rate levied upon the purchase price. It does not include any amounts that the lender might require for insurance premiums, delinquency charges, attorney's fees, court costs, collection expenses, or official fees that might be incurred should the debtor default in the repayment of the debt.

Federal and state "truth-in-lending" laws mandate that the complete cost of finance charges be fully disclosed on credit agreements and billing statements.

Cross-references

Consumer Credit Protection Act.

References in periodicals archive ?
I have been charged for the finance charges. In August, I made the full payment as per the statement and expected everything to be okay, but when I checked the statement of September I noticed there was a finance charge again.
The new card involves an introductory offer of zero percent finance charge on the outstanding retail balance until December 2009.
Section 1128 amends TILA to prohibit creditors from terminating open-end credit accounts solely because the consumer does not incur a finance charge on the account.
From my perspective, credit cards are the preferred product because of three sources of income: finance charge, interchange and fee income.
It requires creditors to highlight the cost of credit as a dollar amount (the finance charge) and as an annual percentage rate (the APR).
Consumers who use Duo would still fund transactions they authorize with a PIN from their checking accounts, but transactions they authorized with a signature would be funded by a bank-provided line of credit, one with a credit card's finance charge and drawing the credit card's higher interchange income.
The shortfall in payment of 12 Fils resulted in a finance charge of Dh35.53 being levied on me in the next statement.
"We will calculate finance charges on cash advances by multiplying the 'average daily balance of cash advances' by the total number of days in the billing cycle, and multiplying the product by the daily periodic rate of finance charge then in effect."
The bill would amend section 128(b) of the Truth in Lending Act to require good faith estimates of disclosures about the cost of credit (such as the annual percentage rate (APR), finance charge, and payment schedule) whenever a home purchase mortgage that is subject to RESPA is satisfied and replaced with another consumer credit transaction.
In return, you pay a finance charge or "discount fee" on the total amount of the receivables--a process called factoring.
Typically, a factor will buy or advance 70%-80% of the money due on a receivable and in turn assess a finance charge or "discount" (LaPaglia suggests 4%-5% as a benchmark) on the total amount of the receivable.

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