Truth in Lending: 3.7.2.1 The Basic Interest Cost
Ordinarily, interest will be the largest component, and sometimes the only component, of the finance charge.303 This is consistent with the notion that interest is the basic cost of credit. The “interest” component of the finance charge disclosure includes “prepaid” or “per diem” interest. This is the amount of interest that accrues from the date of the contract to the date on which the interest begins to accrue for purposes of the first scheduled payment.