What is added to the lender's charges to calculate the loan principal?

What is added to the lender's charges to calculate the loan principal?

• A. Amount financed
• B. Original requested amount
• C. Prepaid finance charges
• D. Loan principal

Answer: (B)

The correct answer is the original requested amount, as this amount represents the base sum that the borrower is looking to obtain from the lender. When calculating the loan principal, the lender adds any additional costs that are part of the loan transaction to this original requested amount. In the context of lending and Regulation Z, the loan principal consists of the original amount the borrower requested plus any fees, charges, or points that need to be associated with obtaining that loan. Therefore, the sum of these additional charges is added to the original requested amount to arrive at the total loan principal that must be repaid. Other possible answers may involve various aspects of loan terms and features, but they do not directly pertain to the calculation of loan principal in relation to the original requested amount. For instance, while prepaid finance charges are associated with the cost of borrowing, they factor into the total cost of the loan rather than the principal amount itself.

The correct answer is the original requested amount, as this amount represents the base sum that the borrower is looking to obtain from the lender. When calculating the loan principal, the lender adds any additional costs that are part of the loan transaction to this original requested amount.

In the context of lending and Regulation Z, the loan principal consists of the original amount the borrower requested plus any fees, charges, or points that need to be associated with obtaining that loan. Therefore, the sum of these additional charges is added to the original requested amount to arrive at the total loan principal that must be repaid.

Other possible answers may involve various aspects of loan terms and features, but they do not directly pertain to the calculation of loan principal in relation to the original requested amount. For instance, while prepaid finance charges are associated with the cost of borrowing, they factor into the total cost of the loan rather than the principal amount itself.