You want to buy a car and therefore you borrowed $10,000 from a bank today for 6 years. The nominal interest rate that the bank charges is 7.2%. If you intend to make equal end-of-month payments and then make an additional final payment of $1,000 at the end of the last month then what will be your approximate monthly installment? $160.31 $175.45 $154.31 $170.43

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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.