Private Lending payoff

This is clearly a noob question but…

How do you pay the interest to the private lender. Let’s use an example. Let’s say I find a private lender to loan me 60k at a 12% interest rate with monthly interest only payments. I plan on paying off the lender in 3 months or less but agreed to pay at least 90 days of interest. How do I go about figuring the monthly interest only payments along with how much I owe on interest after 90 days?



You calculate interest the following way:

Principal x Interest Rate= Total Interest for 1 year

Total Interest divided by 365= Interest Per Day or $19.726

Interest Per Day x 90= Interest For 90 Days or $1,775.34

Your monthly payment would be $600—the total interest repaid in 90 days would be $1800.


Scott Miller

If your are using private lending, will they allow you to just pay the loan off with out any monthly payments? Or is it a Hard Money loan?

In a private lending situation everything is negotiable. You could negotiate that interest accrues. That means it gets added to the balance and compounds.

Some private or hard money lenders will allow accruals for a certain period, ie 90 or 120 days then require monthly payments after that. Otherwise, the LTV of the loan gets too high and they don’t fee secure.

Basically, it’s all in what you ask for and negotiate.