Signing the Loan and Getting the Money

Read the disclosure box before you sign

Regulation Z requires the lender to make its Truth in Lending disclosures clearly, in writing and in a form you may keep, and to give them before consummation: the moment you become bound by the loan. On a personal loan that is usually when you sign. The disclosures sit in a box near the top of the agreement, or on a separate page delivered with it.

If any number differs from the offer, stop and ask before you sign. A higher APR or a longer term at this stage is a new offer, and you can decline it. The guide to the Truth in Lending disclosure walks through each line, and prepayment penalties explains the early-payoff statement.

• Read past the box. Look for an arbitration clause, add-on products such as credit insurance, and the autopay terms.
• Check the names. The lender of record in the agreement should be the company you checked when you applied.
• Keep a copy of every page you sign, in the form you received it.

Signing electronically

Most personal loans are signed online. Under the federal E-SIGN Act, a signature or contract may not be denied legal effect only because it is electronic, so clicking "I agree" binds you the same way ink does.

Disclosures that the law requires in writing are a separate matter. Regulation Z lets a lender deliver them electronically only if it follows the E-SIGN consent rules. Before you agree, the lender must tell you that you can ask for paper copies, that you can withdraw consent and whether that carries a fee, and what hardware and software you need to open and keep the files. You then consent in a way that shows you can open documents in the format the lender will use.

How the money reaches you

After you sign, the lender finishes any last checks and sends the money, usually by direct deposit to the bank account you named. Funding can take anywhere from the next business day to several business days, depending on the lender, the time of day you sign and how fast your bank posts the transfer. Ask the lender for its expected date and do not schedule a payment out of the loan until the money is in your account.

On a debt consolidation loan, the lender may send some or all of the money straight to the creditors you are paying off. The itemization of the amount financed shows how much goes to others on your behalf and how much is paid to you. Keep making payments on the old accounts until each one shows the payoff posted, so a delay does not turn into a late payment.

If the deposit does not match the disclosure

Regulation Z requires the lender either to hand you a written breakdown of the amount financed, or to tell you that you have the right to one and give you a place to ask for it. The itemization lists the money paid to you, amounts paid to others for you, and any prepaid finance charge, such as an origination fee taken out of the loan.

A worked example, not an offer: on a $10,000 loan with a 5% origination fee deducted, $9,500 is deposited, and you repay the full $10,000 with interest. If your deposit is $9,500, the loan worked as disclosed. If it is $9,200, $300 is unexplained. The net proceeds calculator shows what a fee should leave you, and net loan proceeds explains the math.

1. 1 Compare the deposit with the amount paid to you on the itemization, not with the loan amount.
2. 2 Ask for the itemization in writing if you did not receive one.
3. 3 Write to the lender with the loan number, the figure disclosed and the figure received, and keep the reply.
4. 4 Complain to the CFPB or to your state regulator if the lender does not correct or explain the gap.

No federal cooling-off period for most personal loans

The three-day right to cancel in Regulation Z applies to credit in which the lender takes a security interest in your principal dwelling, such as many home equity loans. On those loans the window closes at midnight at the end of the third business day following whichever comes last: signing, the rescission notice or the material disclosures. An unsecured personal loan has no security interest in your home, so this right does not apply to it.

Some lenders write their own short cancellation window into the agreement; if yours has one, the agreement says so and sets the terms. Without it, the way out is to repay the loan. Check whether any fee is refunded and whether a prepayment penalty applies before you count on that. If you are looking at a loan secured by your house instead, our sister site Lendmira covers home equity loans. Your next step after funding is the first payment and autopay.

Questions people ask