How do you determine the annual cost of a loan?

There are several ways to accomplish this, keeping in mind that there are other variables that you may not be able to account for until the loan has been paid in full.

Items like late fees, which you could not foresee, would increase the cost over what you may calculate at the beginning.

You can take the amount financed, and subtract that from the total of scheduled payments.

Or, you can simply look at the finance charges. Almost every contract will indicate to you very clearly what the loan is going to cost you initially.