Before You Sign: 5 Numbers to Check on Your Texas Car Loan Paperwork

The short answer

Before you sign for a car loan, find the Truth in Lending box on your paperwork and check five numbers: the APR, the finance charge, the amount financed, the total of payments, and the total sale price. Then confirm the monthly payment and number of payments match what you agreed to, every blank is filled in, and you leave with copies. If anything does not match, stop and ask before you sign.

I am Steven Wilson, and I help people in Houston and East Texas get financed at Kramer Autoplex. Whether your credit is good, bad, thin, or brand new, the signing table is where a good deal is confirmed. Here is how to read it.

The disclosure box, in plain English

Federal law requires lenders to spell out your loan terms in writing. The Consumer Financial Protection Bureau's guide on what to know before you finalize a car loan explains that the Truth in Lending Act (TILA) requires written disclosures with the important loan terms fully filled out before you sign. The CFPB lists what the form must include:

• Annual Percentage Rate (APR): the yearly cost of borrowing, which is your interest rate plus fees, shown as a percentage.
• Finance Charge: the total interest and certain fees you will pay over the life of the loan if you make every payment on time.
• Amount Financed: the amount you are borrowing.
• Total of Payments: the sum of all payments by the end of the loan.
• Total Sale Price: the total cost of the purchase on credit, taking your down payment into account.

The CFPB adds that the disclosures also show the number of payments, the monthly payment, late fees, and whether you can pay the loan off early without a penalty.

How to check the numbers

You do not need to be a math whiz. Ask yourself four questions:

1. Is the amount financed what I expected? Start with the agreed price of the car. Add tax, title, and fees, plus anything else you agreed to finance. Subtract your down payment and any trade-in equity. If you owe more on your trade than it is worth, that difference may be added in. If the amount financed is higher than your own math, ask for a line-by-line explanation.

2. Does the APR match what we discussed? The APR includes the interest rate plus fees, so it is the better number for comparing offers.

3. Does the term match? Count the number of payments. A lower monthly payment can simply mean a longer loan. Longer terms usually mean paying more interest overall, which shows up in the finance charge.

4. Do I understand every product I am paying for? Optional products like service contracts or GAP coverage should be items you chose, with prices you understand. If you did not ask for something, ask why it is there.

Before you leave the table

The CFPB's checklist for finishing your paperwork is simple:

• Every blank is filled in. Most are completed by the dealer. If you are asked to sign a blank or partly blank form, decline.
• Everyone has signed, you and the dealer.
• You have copies of everything, printed or electronic. If they are electronic, make sure you can save or print them.

The CFPB also notes you can ask for the TILA disclosures earlier, even take them home to compare with other offers. And if you are uncomfortable with any part of the deal, you can walk away.

After you drive home

Expect a welcome message from your lender telling you where and when to send payments, according to the CFPB. Set up payments so the first one is not missed. Late payments can bring fees, hurt your credit, and in the worst case lead to repossession.

How I work with buyers

My job is to shop your application across a wide network of lenders, including lenders that work with damaged or limited credit, and then walk you through the numbers in plain English. A same-day answer on where you stand, what you qualify for and what the monthly looks like, is typical, but it is not a guarantee of approval, and I cannot promise a specific rate or payment before a lender reviews your application.

Getting started takes about 20 seconds: your name plus a phone number or email, with no credit check yet. The full application, which does involve a credit check, comes after that. You do not have to come to Houston to get an answer, and delivery is free anywhere in Texas.

Takeaway: The five numbers in the Truth in Lending box tell you what your loan really costs. Check them against what you agreed to, make sure no blanks are left, and keep your copies. When you are ready to see where you stand, start here.

See what you may qualify for