Future Business Leaders of America (FBLA) Business Calculations Practice Test

Disable ads (and more) with a membership for a one time $4.99 payment

Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

Practice this question and more.

What term describes the interest on a loan?

Down payment
Carrying charges
The APR
Principal

The correct answer is: Carrying charges

The term that describes the interest on a loan is referred to as "carrying charges." Carrying charges encompass various costs associated with borrowing, including interest, fees, and other charges that borrowers may incur over the life of the loan. It represents the total financial obligation that the borrower must pay in addition to the principal amount borrowed. The principal is the original sum borrowed or the amount of money used to calculate interest. The APR (Annual Percentage Rate) reflects the yearly cost of borrowing expressed as a percentage and includes interest and any additional costs or fees but does not directly denote the interest itself. A down payment is an initial upfront portion of the total amount due, often required when taking out a loan, particularly for mortgages. Understanding carrying charges is crucial for borrowers, as they provide insight into the overall cost of borrowing and help in comparing loan options more effectively.