Question

Amy borrowed $4000 from the auto dealership to purchase a used car to get to work. The auto dealer informed her that the total amount that she would need to repay included the $4000 that she borrowed, $800 in interest, and $40 of loan fees for a total repayment amount of $4840. What is the finance charge on Amy’s auto loan?

$840.

$800.

$40.

$4840.

Answer 1

HI

finance charge is the total fee plus interest charged by lender for the loan that he is providing.

Here interest amount = $800

loan fee = $40

so total finance charge = 800+40 = $840

Hence option 1 is correct here.

Thanks