A local authority may not enter into, or vary, a credit arrangement if doing so would result in a breach of—
the limit for the time being determined by or for it under section 3, or
any limit for the time being applicable to it under section 4 , or
any limit for the time being applicable to it under section 12A.
In applying those limits for the purposes of subsection (1)—
entry into a credit arrangement shall be treated as the borrowing of an amount of money equal to the cost of the arrangement, and
variation of a credit arrangement shall be treated as the borrowing of an amount of money equal to the cost of the variation.
The Secretary of State may by regulations make provision about the calculation for the purposes of subsection (2) of the cost of a credit arrangement or a variation and may, in particular, make provision about the treatment of options.