American_Bankers_Association
CTFA · Question #315
A method of calculating interest by computing finance charges on the original loan balance and then adding the interest to that balance.
The correct answer is B. Add-on method. See the full explanation below for the reasoning.
Fiduciary and Trust Activities
Question
A method of calculating interest by computing finance charges on the original loan balance and then adding the interest to that balance.
Options
- ARule of 78s
- BAdd-on method
- CCredit life
- DPre-paypment penalties
How the community answered
(22 responses)- A5% (1)
- B73% (16)
- C9% (2)
- D14% (3)
Topics
#add-on interest method#loan calculation#finance charges#consumer credit
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