You'd like to know how much you can borrow from the bank using a 25 year principal and interest (P&I) home loan. You can afford monthly payments of $3,600. The interest rate is 3.72% pa compounding monthly which is not expected to change. How much can you borrow now? Select one: a. $699,590.04 b. $702,439.32 c. $705,271.02 d. $878,048.78 e. $1,714,285.71

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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.