You buy a house and finance $250,000 at 4% per year. One loan is 30 years (360 monthly рayments) and one is 15 years (180 monthly payments). What is your payment for each loan and what is the total paid over the life of the loans (again, assume that you do not make any early payments)?

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A:

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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.