Key Facts Document

Meaning and Definition

A Key Facts Document (KFD) is a document provided by a lender or financial institution to borrowers during the car finance application process. It aims to provide clear and concise information about the terms, conditions, and costs associated with the car finance agreement. The KFD outlines essential details, including the loan amount, interest rate, repayment schedule, total cost of credit, and any additional fees or charges. It helps borrowers understand the key features of the loan and make informed decisions.

Why it is important to know

Understanding the concept of a Key Facts Document is important as it enables borrowers to review and compare the terms and costs of different car finance options. It ensures transparency and allows borrowers to assess the affordability and suitability of the loan before committing to the agreement. Reviewing the KFD helps borrowers identify any potential hidden fees, understand their rights and responsibilities, and make informed choices about their car finance.

Example in car finance

Suppose you are applying for car finance from a lender. As part of the application process, the lender provides you with a Key Facts Document outlining the key details of the loan. You review the document, which clearly presents the loan amount, interest rate, repayment term, monthly payment amount, total cost of credit, and any additional fees such as arrangement or administration charges. By carefully examining the KFD, you can assess the affordability of the loan, compare it with other offers, and ensure that you have a clear understanding of the loan terms and associated costs.