this does not seem right …. Question of loan?

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I wanted a loan given to my friend $ 1,000 6.25% April for four months. According to this page (http://www.mortgage-calc.com/amortization/amortization2.html), I just want to make $ 13.04 profit after four months! Whats goin happening here? It seems I should be more.

6 Comments
  1. Reply
    Fritz
    February 4, 2011 at 7:07 am

    My figure is $ 20.83. However you risk losing $ 1,000 and a friend.
    I

  2. Reply
    CHEPIBE72
    February 4, 2011 at 7:44 am

    That is because 4 payments means that he will be paying 1/4 of the principal every time. Which means a lot less interest every month he pays.

    Why do you think credit cards charge horrendous interest rates and make your payments low? That way they get good interest rate and you pay very little principal.

    Now put that 1K into a 20.99% interest and put it with a payoff of 36 months. Now you see why credit cards make good money.

    Best thing is to charge a flat fee instead of interest. That is what I do when I loan money to a friend. Loan the 1K and arrange for like a $ 25 monthly flat fee.

    Good Luck!

  3. Reply
    stan c
    February 4, 2011 at 8:39 am

    Just do $ 1000 x6.25 which comes to $ 62.50 which equals 12 months. Then you divide the 65.50 divided by 12 which comes to $ 7.50 per month x 4 = $ 30.00

  4. Reply
    bdancer222
    February 4, 2011 at 9:19 am

    Your 6.25% is an annual rate. You have to convert that to a monthly rate by dividing it by 12. Then multipy the balance by the monthly rate.

  5. Reply
    knitting bear
    February 4, 2011 at 9:27 am

    6.25% APR is only 6.25% over the course of a year. That is roughly .52% or .0052 per month interest on $ 1000 which would be about 20.80$

  6. Reply
    sharriaries
    February 4, 2011 at 9:47 am

    If your loaning money to a friend, the point should not be making money….
    Otherwise the standard rate for most loans is 9%
    I would also make a deal that they have due dates for a minimum payment each month, and if they are late, its a 15.00 late fee. And I would tell my friend that every month after the 4 months they still owe you, they will be charged a 20 dollar fee for your trouble.

    But really, when friends and money get involved, the friendship usually ends. Why not be a good friend and tell your friend to try a personal loan through a local Credit Union first? That way if they screw up, its not your problem, and your friendship is safe….

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