Finance Charge Calculator
The total finance charge on a loan or credit balance — every dollar of interest and fees over the life of the borrowing.
The finance charge is everything the credit costs: total payments less the amount financed, plus any fees rolled in.
How the finance charge calculator works
The finance charge is everything the credit costs: total payments less the amount financed, plus any fees rolled in. It is the number that makes two loans comparable when their rates and terms differ.
A longer term always lowers the payment and raises the finance charge. The comparison row makes that trade explicit rather than leaving it to be discovered later.
Formula: finance charge = total payments + fees − amount financed
Worked examples
| Inputs | Total finance charge | Note |
|---|---|---|
| 20,000 at 9% over 48 months | $4,289.64 | about 4,300 of finance charge |
| A longer term | $6,356.77 | lower payment, much higher charge |
| No fees | $3,889.64 | interest only |
FAQFrequently asked questions
What is a finance charge?
The total cost of credit — all interest plus any fees, over the life of the loan.
Why does a longer term cost more?
Because interest accrues for longer on a balance that falls more slowly. The payment drops and the total rises.
Is the finance charge the same as the interest?
Not if there are fees. Establishment, service and account fees all form part of the cost of credit.
How do I compare two loans?
By total finance charge over the same term, not by the monthly payment. A lower payment often means a higher total.
What is a reasonable charge?
It depends entirely on the rate and term. Under 15% of the amount financed is modest; above 30% deserves a hard look at whether the purchase is worth it.
Where these figures come from
- CFA Institute — Quantitative Methods: The Time Value of Money — the discounting, annuity and IRR conventions used here
- US Federal Reserve — Regulation Z (Truth in Lending), APR calculation — why APR includes fees where a nominal rate does not
- Consumer Financial Protection Bureau — the US consumer finance regulator
Last checked: September 2026. These are the standard textbook formulas; the conventions named are those of the CFA Institute curriculum and ISO 80000 usage.