True Interest Cost - TIC

AAA

DEFINITION of 'True Interest Cost - TIC'

The real cost of taking out a loan. True interest cost includes all ancillary fees and costs, such as finance charges, possible late fees, discount points and prepaid interest, along with factors related to the time value of money.

It can also refer to the actual cost of issuing a bond.

INVESTOPEDIA EXPLAINS 'True Interest Cost - TIC'

The federal Truth in Lending Act requires lenders to disclose the true cost of credit to their borrowers and prospective borrowers in the consumer-loan agreement. This cost must be computed by a standard formula that incorporates interest, fees and other costs. This prevents lenders from making misleading statements about the real cost of borrowing from them.

RELATED TERMS
  1. Bank

    A financial institution licensed as a receiver of deposits. There ...
  2. Annual Percentage Yield - APY

    The effective annual rate of return taking into account the effect ...
  3. Credit

    1. A contractual agreement in which a borrower receives something ...
  4. Interest

    1. The charge for the privilege of borrowing money, typically ...
  5. Truth In Lending Act - TILA

    A federal law enacted in 1968 with the intention of protecting ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. Understanding Credit Card Interest
    Retirement

    Understanding Credit Card Interest

  2. Student Loan Debt: Is Consolidation ...
    Retirement

    Student Loan Debt: Is Consolidation ...

  3. Home-Equity Loans: What You Need To ...
    Options & Futures

    Home-Equity Loans: What You Need To ...

  4. Home-Equity Loans: The Costs
    Options & Futures

    Home-Equity Loans: The Costs

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center