What is amount financed?
Understand the Problem
The question is asking for the definition or explanation of the term 'amount financed,' which typically refers to the total amount of money that a borrower receives from a lender to purchase an asset, such as a car or house, minus any down payments made.
Answer
The loan amount minus the prepaid charges.
The amount financed is the loan amount minus the prepaid charges.
Answer for screen readers
The amount financed is the loan amount minus the prepaid charges.
More Information
The amount financed represents the net amount of credit provided to the borrower after deducting any prepaid charges such as loan origination fees or other upfront costs.
Tips
Common mistakes include confusing the total loan amount requested with the net amount financed after deducting prepaid charges.
Sources
- What does “amount financed” mean when getting a mortgage loan? - consumerfinance.gov
- Investopedia Definition of Amount Financed - investopedia.com
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