Finance Charge

A finance charge is the total cost of borrowing money or using credit, expressed as a monetary amount — encompassing all fees, interest, and costs imposed by a lender in connection with a credit facility, loan, or credit card account. Finance charges include interest on the outstanding balance, processing fees, origination fees, late payment fees, annual fees, and any other cost associated with the credit relationship. Under India's Fair Practices Code mandated by the RBI for banks and NBFCs, lenders are required to clearly disclose all finance charges to borrowers before credit is sanctioned, enabling informed comparison of credit products. The Annual Percentage Rate (APR) — which expresses total finance charges as an annualised percentage of the loan amount — provides a standardised measure for comparing the true cost of different credit products. For investors and consumers using Ventura Securities' financial planning and lending-related services, understanding all components of finance charges is essential for accurately calculating the cost of leveraged investment strategies, margin trading facilities, and personal credit products.