Dictionary of Banking Terms: True Interest Cost (TIC)
True Interest Cost (TIC)
- Annual Percentage Rate cost of credit, including finance charges, credit life insurance, discount points, and prepaid interest. The federal truth in lending act requires lenders to disclose in consumer credit loan agreements the true cost of credit, using a standard method of computing the borrower's inance charge, plus loan application fees and other costs of borrowing. The true interest cost of a $4,000 installment note at 10% interest payable ver 36 months is $645.80. Thus, the total cost of the loan, including interest, is $4,645.80. 2. actual cost of issuing a bond, taking into account the resent value (time value) of money. The TIC, commonly used in municipal bond offerings, is the rate of interest, compounded semiannually, equired to discount the payments of principal and interest to bondholders to the original purchase price. Compare to Net Interest Cost
