I have chunk of money that I would like to loan to my brother. I would like to charge him interest same as banks do.
Is there a website or online service where I can enter the "loan" amount, interest, and it will tell me each month the payment?
And will also take into account if he pays more one month and will recalculate interests and so on...
Thanks!
http://www.calcamo.net/loancalculator/simulation/fixed-rate-loan.php5
This website is a calculator only and has some extra features that take into account late payments, paying extra to reduce principal, and has the ability to export amortization table to excel that you could use to keep track of the loan.
If you are looking for a web site to manage and keep track of the whole process, reminder emails, accepting credit card payments, etc.. paybaq.com may be right for you.
It is pretty easy to setup a spreadsheet for calculating interest payments and remaining balance. Do a quick search online. You may want to put it in something like Google Docs, where brother can view the status, but only you can edit it. When you get a payment, a portion goes to interest and another to principle. The formulas will do the work for you.
However, I feel that there is a bigger issue. The math may seem like a good deal for the both of you, but I would be very hesitant to loan a family member money.
What if he does not pay? What if he is late with a payment and goes on a vacation himself? What if his significant other resents the payment that you collect which precludes her from buying a new TV, etc...
People come to hate/resent big corporations that they have to make payments. How much more so one that has a face....that comes over and eats? While this loan is outstanding holidays may never be the same.
Is the loan a real need? Are you in a position to give them the money? You may want to consider the latter.
Is there a reason he can't just borrow the money from the bank?
Here is a simple loan payment calculator. If you allow early principal repayment, then you should just be able to plug in the new principal amount to find his new monthly payment (someone please correct me if I'm mistaken).
Are you averse to creating a spreadsheet yourself in excel? I suppose it could become quite an undertaking, depending on how detailed you chose to get with the interest. Seems like it would be more direct and serve the dual purpose of recordkeeping.
It's important to agree in advance whether pre-payments go to principal or go partly to interest (prepaying for periodic amounts not yet due, which are mixed principal and interest). It's a family loan, so it probably makes sense to allow the prepayments to pay down principal; you don't need to structure your interest income and prevent him from depriving you of interest income (which many bank loans will do). Allowing early principal repayment is pretty easy to calculate in your own excel spreadsheet, since you just need to know the remaining principal, time outstanding, and the interest rate.
Note that if you are a US citizen, then the interest paid to you will be taxable income to you ("ordinary income" rate). Your brother will not be able to deduct the interest payments, unless maybe they are used for something like his business or perhaps mortgage. There is no deduction for just a personal loan.
Also, if you instead structured it without interest, then the interest not charged would be considered a gift under US gift tax law. As long as the annual interest were under the gift exclusion amount ($14,000) then there would be no gift tax. With no interest and no gift, you would not have tax consequences.
