Co-signing and co-borrowing have their own pros and cons.
What is an amount financed?
The amount financed refers to a borrower’s loan principal and other costs and fees that have been rolled into the loan’s monthly payments. If the borrower makes a deposit, that money might be applied before the amount financed is set.
Amount financed is a required term for any contract between lenders and borrowers. As stated in the Truth in Lending Act, the actual figure must be disclosed to the borrower before he agrees to any transaction.
Any fees that may be included in the total must be clearly stated in writing and can cover a range of costs from loan underwriting and processing to loan recording and legal fees. This disclosure helps the borrower to distinguish between the loan principal from the total loan figure, including fees.
When tallying the amount financed, deposits are also factored into the total. Some lenders may require the deposit to be applied to the total.
Amount financed examples
Jerry applied for a $10,000 personal loan, but that amount isn’t likely what his loan total will be at closing.
Instead, his total will include fees set by the lender that will be rolled into the loan total and assessed at the time of closing. If the fees total $200 and the lender allows Jerry to roll them into the loan, the amount financed will be $10,200.