Finance charge

A finance charge is the total fee incurred by a borrower to access and use debt. The charge compensates the lender for providing funds to a borrower. In essence, it is the cost to borrow money. The total finance charge includes the following:

The amount of finance charges is closely related to the creditworthiness of the borrower. Thus, a stable business with predictable cash flows and a conservative financial structure will incur lower finance charges.

The government requires that finance charges be disclosed in lending documents issued to borrowers.

Related Courses

Corporate Cash Management 
Corporate Finance 
Treasurer's Guidebook