Directions: Read the problem carefully and solve what is being asked using partial payments on loan. Problem: Jay wants to have a new car but he doesn't have enough money so he decided to make a car loan to finance his buying a new car. The Piwong Bank requires 20% of the amount of the car as the down payment. If Jay is going to buy a brand -new car worth P700,000.00, then he has to make a down payment of P140,000.00 and apply for a loan for the excess of P560,000.00. If Jay is going to pay the loan for 3 years with the simple interest rate of 4.79%, a. How much is the maturity value of the car? b. How much is the monthly installment? c. What is the total interest of the car loan?

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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.