Asa Khumalo purchased a vehicle to the value of R224987 today and expects to make repayments for the next 7 years. The bank charges Asa at 12% pa compounded monthly. Asa believes that between months 18 and 21 she will not be able to make payments. What will Asa's new payments be over the remaining term.

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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.