Donate SIGN UP

Personal Loan from Friend

Avatar Image
dmoltrup | 03:14 Sat 06th Oct 2007 | Business & Finance
2 Answers
I am in the process of borrowing $30,000 from a friend. I have printed an amortization schedule and I believe we have agreed on 15% interest over five years. I am not one to spend more than I have to, so I plan on getting the loan paid off early. What would be the procedure for calculating any extra payments I make? I would expect the extra payments to affect the principal at the time of payment, drastically reducing the interest. I think he would just end the loan early to preserve the interest that has been loaded in first, according to the amortization schedule. Since it is a "friendly" agreement, it wouldn't be subject to the banking laws and standard practices. I want to draw up in our contract with verbiage containing this situation and how it would be calculated. What is the simple way for two individuals with a calculator, or Excel to figure out the affect of extra payments on the principal? There are thousands of websites that show the overall affect while CREATING the amortization, but how do I calculate the real-time affect on the fly, months and years into the actual payments?
Gravatar

Answers

1 to 2 of 2rss feed

Best Answer

No best answer has yet been selected by dmoltrup. Once a best answer has been selected, it will be shown here.

For more on marking an answer as the "Best Answer", please visit our FAQ.
To be honest, I've never heard of anything like this, but I think unless you both are clear and agree on everything and have an official agreement drawn up, it has the potential to end in tears.

I think I'd visit an independent financial advisor - together - to get their view on interest calcultions etc - as it'll be a neutral view.
As an IFA myself...I would not welcome such queries being passed into my office.!!!! I really could not be bothered to get involved in such a query!! Especially seing as I had nothing to do with setting up the loan in the first place.
I would suggest you discuss it further with your lender and seek a mutual beneficial solution as they will probably prefer you to pay the loan off quicker!!
Am I right in saying that the Fed rate is 4.75%????? Not much of a mate if he is charging you over 3 times the base rate!!!!!!!

1 to 2 of 2rss feed

Do you know the answer?

Personal Loan from Friend

Answer Question >>

Related Questions