True Interest Cost - TIC


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.

BREAKING DOWN '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.

  1. Interest

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

    A federal law enacted in 1968 with the intention of protecting ...
  3. Credit

    1. A contractual agreement in which a borrower receives something ...
  4. Annual Percentage Yield - APY

    The effective annual rate of return taking into account the effect ...
  5. Bank

    A financial institution licensed as a receiver of deposits. There ...
  6. Accountant

    A professional who performs accounting functions such as audits ...
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