You want to buy a car, and the local bank will lend you $20,000. The loan will be fully amortized over 5 years (60 months) and the nominal interest rate will be 12%. The interest will be paid monthly. What will be the monthly loan payment? draw a time line and identify the known variables and unknown variables as if you were to input in EXCEL

Q: You want to buy a new sports coupe for $74400 and the finance office at the dealership has quoted…

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.