After earning a BS Electrical Engineering degree, Jess decided to start his own business. His rich, generous uncle has agreed to loan him Php 800,000 at an annual 4% simple interest. Jess is to pay his uncle the yearly interest on the loan anniversary and return the principal on the fifth anniversary. What is Jess’s loan payment schedule

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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.