Beverly borrowed $12,600.00 at a low interest rate of 2.2% compounded monthly for 3 years to pay off her credit card debt. After making 2 monthly payments of $362.00, she is ready to pay off the loan.Determine the payoff value of Beverly’s loan after making 2 monthly payments of $362.00.Calculate the amount Beverly saved by paying off her loan after making 2 monthly payments.

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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.