[1] It includes not only interest but other charges as well, such as financial transaction fees.
In personal finance, a finance charge may be considered simply the dollar amount paid to borrow money, while interest is a percentage amount paid such as annual percentage rate (APR).
Creditors and lenders use different methods to calculate finance charges.
In financial accounting, interest is defined as any charge or cost of borrowing money.
In effect, the accountant looks at the entire cost of settlement on a Housing and Urban Development (HUD) form 1 (the HUD-1 Settlement Statement) document as interest unless that charge can be identified as an escrow amount or an amount that is charged to current expenses or expenditures other than interest, such as payment of current or prorated real estate taxes.