What is the difference between the Loan Amount and the Amount Financed?
On face value, the term “Amount Financed” seems interchangeable with the term “Loan Amount”, when in fact it is not. This discrepancy is often noticed on the federally mandated Estimated Settlement Statement. The Loan Amount is the amount you are borrowing, while the Amount Financed is the Loan Amount less the borrowing costs that are used to calculate the APR (annual percentage rate.) The “Amount Financed” often confuses potential borrowers as borrowing costs typically are added into the “Loan Amount” applied for. Always refer to the “Loan Amount” to determine the dollar amount you are truly applying for.
PFC are the charges the bank calculates as "costs that come with the loan" and are included in the APR. This typically includes origination fees, points, underwriting, application, other lender fees and the pre-paid interim interest until the end of the month. Sometime’s the attorney’s fee is included, it should be if the bank is requiring the use of a specific one. If you look at the next box, the "finance charge", those fees ($3154) are added to the total along with the interest you will pay over the life of the installment loan and any PMI charges. You add the finance charge to the amount financed to get the total payments if you pay the minimum amount every month. If you pay more than the minimum monthly payment, the finance charge and payment decrease as the interest you pay over the life of the loan decrease. This will also change your effective APR over the life of the loan, so those figures are only valid for someone sticking to the payment schedule listed on the TIL.
