Upon January 1, 2020, Sally Corp. borrowed $360,000 from County Bank and signed a 15-year note payable. The loan includes a 4% interest rate and a fixed yearly payment of $32,379. Payments will commence on January 1, 2021. What portion of the payment made on January 1, 2022 will be used for involvement

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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.