Let’s say I borrow private money from someone, how do I go about paying them back with interest? Are there companies out there that offer servicing of private loans like that or do the parties involved have to use a calculator to figure out the month’s interest and keep a running tally? How is this usually handled?
Are they giving you a mortgage? If so for how long? Either way-anyone with
a financial calculator can compute what the monthly payments will be. You just
pay them that amount each month over the life of the loan until paid off. Hopefully
it’s not an interest only loan…
IE:
100k loan
10% rate
10yr term
$1,321.51 monthly for 120 months
I’m just talking about in general if I were to say setup a loan with someone either in doing an owner financed property or just a straight up loan.
While private loans don’e usually require a servicing company its a good idea to document the repayment schedule and obtain seperate receipts or cancelled checks for each payment. This way everyone is on the same page as to when and how the loan gets paid off.
You don’t necessarily need a company to handle it, but check out CircleLending.com to see what they offer. They are a third party private financing service type company.
Can a servicing company be used for any loan? Anyone have any examples of ones that will service loans for people that aren’t on the level of banks? I’m thinking down the line if I look to borrow from people or see if someone will do owner financing it would be best to have a servicer that will do the work to save them some effort and make them feel safer since it will be going on my credit report if I fail to repay or something. I also have some family members that might be stashing away some cash that I might look to tap. I don’t want to do some sort of cocktail napkin contract, nothing ruins family like handshake agreements. Always better IMO to have things done with some sort of real guidelines and a professional company in the middle to make sure all obligations are met so there are never hard feelings. Keep it strictly business.
I’ll check it out, thanks.
You might want to pay a good r.e. attorney 300/400 bucks to draw up loan docs for u.
I know quite a few good commerical and residential re attys, my full time job is working for an IT firm that handles mostly law offices in all parts of my state and part of MA. I will definitely have them write them up.
Btw, thanks for the heads up on Circlelending, I’m looking at it now and am impressed with it so far.
Someone posted that above already… ???
I’ve had loan payments go through a typical title/escrow company. They charge a few dollars ($10-$15) per month, but it’s a pretty painless way to go.