Suppose that you take out a federal direct loan on September 1 before your senior year for $7500 (the maximum allowed for a dependent student) and plan to begin paying it back on December 1 after graduation (so you will have had the loan for 15 months, including the six-month grace period after leaving school). The interest rate is 4.29% and you pay the interest every quarter until that December 1. On that December 1 you will owe $__Answer 1__, and $__Answer 2__ of that will be interest

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Q: Suppose that you take out a federal direct loan on September 1 before your senior year for $7500…

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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.