Manuel and Aponi want to buy a $221,000 home. They plan to pay 20% as a down payment, and take out a 30 year loan at 3.85% interest for the balance. a) How much is the loan amount going to be? b) What will the monthly payment be for Manuel and Aponi? c) How much of the first payment is interest? d) What is the total of the payments? e) How much interest was paid?

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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.