Assume you just bought a new car and now have a car loan to repay. The amount of the principal is $25,000, the loan is at 8.5% APR, and the monthly payments are spread out over 7 years. What is the loan payment?

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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.