ou loaned your brother a substantial amount of money and are working out a payment system. You’ve mutually agreed to a repayment schedule of $400 per month. You will charge 1 percent per month interest on the overdue amount. If the current balance is $20,000, how long will it take for the account to be paid off

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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.