Polly purchased a car. She paid ₱150,000.00 as down payment, and ₱5,500.00 payable at the beginning of each month for 48 months. Money is worth 12% compounded monthly.  What is the periodic rate? A. 1% B. 12% C. 0.01% D. 2% How many payments must be made? A. 12 B. 24 C. 6 D. 48 What is the equivalent cash price of the car? A. ₱210,945.35 B. ₱340,091.59 C. ₱360,945.35 D. ₱490,091.59

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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.