Pepito Catamco is excited to own a brand new Toyota car. Toyota is selling the for P1.2million. The required down-payment is 25% of the selling price. Banco de Coco is willing to finance the unit at 12% annual interest. Pepito wants to pay on a quarterly basis good for three years only. How much is the quarterly payment of the loan for three years? How much is the outstanding balance of the loan after paying for one year?

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A:

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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.