Final answer:
PFC stands for Prepaid Finance Charge and is related to charges paid by a borrower at the outset of a loan, which affect the Annual Percentage Rate.
Step-by-step explanation:
PFC stands for Prepaid Finance Charge. It is a term commonly used in the context of lending and borrowing.
A Prepaid Finance Charge represents any finance charges that a borrower pays before or at the closing of a loan transaction, separate from the principal of the loan. This can include loan origination fees, points purchased to lower the interest rate, and certain insurance premiums.
Identifying PFCs is important as it affects the calculation of the Annual Percentage Rate (APR) on a loan, which represents the true cost of borrowing.