You are buying a $10,000 second hand car with a down-payment of $3,000 and you finance the remaining amount with a 3 year loan at 7.8% compounded weekly. (A) What are your weekly payments? How much interest in total are you paying? (B) What is the remaining balance after 2 years?

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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.