"2 c's shy" means 2 hundred dollars short.
"shy" means lacking or short here.
Example: She is just shy of the world's record . . .
This conversation sounds like a loan has been given to David. He is making payments. He is two hundred dollars short in this payment. Rich says that now the $200 will be considered as part of the principle of the loan (the orginal amount borrowed) David probably has to pay a high interest rate for this loan.
Student or Learner