Which of the following must be included when calculating the true cost of credit?

When calculating the true cost of credit, it is essential to consider not only the principal and interest payments but also any additional fees and costs associated with obtaining credit. This comprehensive approach encompasses all expenses that a borrower might incur, such as origination fees, closing costs, and any other charges that the lender may impose. By including these fees, you gain a clearer understanding of the total financial obligation and can make more informed decisions about the loan.

In contrast, focusing solely on principal and interest would provide an incomplete picture of what borrowing will actually cost over the term of the loan. Similarly, considering only the lender’s fees or the market value of the property would neglect other vital costs that contribute to the overall expense of credit, potentially leading to financial surprises for the borrower.