Question

Ladonna borrowed 2,000 to purchase a used car. The total amount she will need to pay includes the2,000 she borrowed, 200 in interest, and75 in loan fees. Using that information, what is the finance charge on Ladonna's loan?

Answer 1

The finance charge on LaDonna's loan is the total of the interest and loan fees, which amounts to $275.

Step-by-step explanation:

The student is asking about the finance charge on a loan. The finance charge for LaDonna's loan can be determined by adding the interest and loan fees to the principle amount she borrowed. Specifically, the finance charge is the cost of credit, including interest and other fees. In LaDonna's case, she will pay $200 in interest and $75 in loan fees on top of the $2,000 principle amount of the loan.

The finance charge on LaDonna's loan would thus be:

Interest ($200) + Loan Fees ($75) = Total Finance Charge

So, LaDonna's total finance charge will be $275.