Loan Schedule

A loan schedule is a report that gives details about loan repayment, usually in regard to a mortgage or other structured interest loan. There are several items listed in a loan schedule, including the principal, or the amount of money owed. This figure is the amount of the loan after the down payment has been subtracted. The loan schedule also lists the interest rate and shows how much interest in included in each payment.
A loan schedule is intended to give both borrower and lender a good record of the particular terms and conditions of the contract at a glance. Sometimes called an amortization schedule, it details how many payments are required to pay off the loan in full, the frequency of the payments, and how much principal and interest is paid down with each timely payment. Amortization is a calculation, which divides the principal by the number of months allowed for repayment of the loan. The interest is then calculated in accord with the length of the loan and the current rate.
You will notice in the first payments on your loan schedule that your interest payments are higher than your principal payments. It usually works this way until about half way through the life of the loan. You will notice that the amount of interest being paid each month goes down, while the amount of principal being paid each month increases. When you reach the half way point, you will see that the payments begin to even out. Then, you will begin to pay more principal than interest each month, until the loan is paid off.
Be sure to ask whether or not you are allowed a grace period for loan payments. A grace period allows you between five days and two weeks to make your payment after it is actually due, without being penalized. There are many reasons for grace periods, but one reason is that it helps the lender avoid restructuring the loan schedule every time a payment is a day overdue.
Also, remember that interest payments are often tax deductible, so bring your loan schedule along when you visit your accountant or tax preparer. If each of your payments throughout the year has been made in a timely manner according to the terms of the loan, your loan schedule will provide an accurate record of the interest paid, which can be deducted. Many lenders will also send out an additional record of interest payments around tax time.

Think it through before lending money to a friend

Question: A good friend of mine is in a tight spot financially. I'd like to help her out, but I'm worried that lending her money might sour the friendship.

Answer: Adding money issues to a friendship can result in an explosive situation. The first thing you need to do is determine why your friend is having financial problems. Is this a temporary state, or does your friend always seem to be struggling? If financial panic is a recurring theme, you need to understand that in most cases the problem runs deeper than a lack of funds. Sometimes people overspend to assuage feelings of inferiority or inadequacy. Or they run up debts trying to find happiness through expensive possessions. Others are never inclined to set aside money for unexpected expenses and are consistently flattened by them. Unaware of the true reason for their financial irresponsibility, people like this usually have difficulty changing their fiscal habits.

If your friend is always experiencing financial problems, any money you give them will just serve as a Band-Aid, and sooner or later your friend will be in dire straits again.

Ask yourself: Can I afford the loan? What would happen if your friend never paid me back? How would you feel? If you cannot afford it, or if you are not willing to relinquish your hold on the money, don't make a loan. On the other hand, if your friend is ordinarily financially responsible and you are sure you won't need the money soon, draw up a loan agreement detailing how much you are lending, when exactly your friend will repay you, and whether both of you would feel better if the loan had interest.

One 2 One Lending provides the tools to “Get it in Writing.” The AgreementBuilder will walk you through step by step in creating a promissory note and loan schedule. This way your money will help not only your friend and it won't destroy the friendship.