Classification of Related Expenses
Related expenses can be divided into two groups:
Related expenses are denoted as percentages of the principal in the example above, specifically the credit allocation charge and stamp fees. From now on, we will call the expenses in this group expenses denoted in percentages, or simply, percentage expenses.
- Fixed related expenses: These expenses are denoted in dollars, and their amounts are not related to the size of the loan. In the example, these are the fees for opening an account, insurance, and payment for a credit framework.