Which of the following is included in a loan's finance charge?

A loan's finance charge encompasses all the costs associated with obtaining the loan, which is designed to give borrowers a clearer picture of the total expense of borrowing money. The finance charge includes various elements such as interest, loan fees, service charges, and points.

Loan fees may include origination fees, application fees, and any additional charges that are necessary to process the loan. Service charges can cover the costs of managing the loan and other related expenses throughout the loan term. Points are a form of prepaid interest that borrowers can choose to pay at closing in order to lower their monthly interest rate.

By aggregating these components, the finance charge provides a comprehensive look at what a borrower will ultimately pay over the life of the loan, rather than just focusing on the interest rate or closing costs in isolation. Understanding this helps buyers make informed decisions when comparing different loan options.