Che Kow buys a house for RM450,000 with 20% down payment. He takes a loan from a bank to settle the balance. The bank charges him an interest rate of 4.8% compounded monthly. He is required to pay equal monthly payments for thirty years to settle the loan. i) Calculate the monthly payment and the total interest charged.  ii) If he fails to pay the first three monthly payments, calculate the amount he has to pay on the fourth payment in order to settle the outstanding arrears.

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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.