I am lending a family member some "lolly". I thought as an ex engineer, maths teacher etc then printing out a spreadsheet with the details and also an agreement would be a doddle. I've been retired too long and the grey matter is suffering from rust. I have Office, MSWorks Word Perfect etc and would appreciate some advice and help.

is interest involved?

Most spreadsheets have a 'future value' function, which takes a principal and works out the total value of the repayments. Obviously, you need to specify the number of periods, the value of the prinicpal, and the rate of interest.

You may need to adjust the number of periods and the rate of interest to reflect the rate at which the sum is compounded. For example, a three year loan compounded annually at 12% would be input as 3 periods at 12% interest. However, the same loan compounded monthly would be input as 36 (3*12) periods at 1% interest.

Finally, once you've done this, you can create a formula which deducts the value of the principal from the output of the future value formula above, in order to calculate the total amount of interest paid over the term of the loan.

If you want to get a bit fancier than Mr Gates' generic software, with it's rounding issues, try the evaluation software at this site:

http://www.intersoft.co.nz/finPOWER/finCALC.htm

Couple of things spring to mind

1st would be never lend to friends or family as in the majority of cases you'll never see it again.

If you are going to do it then paperwork is crucial, make up an agreement, dot the I's and cross the T's, get it signed, witnessed and dated.

Specify what interest rate, loan period, repayment schedule etc

Too many arguements have started in the past and a verbal agreement can't be produced to show what was intended, nor to give prove that it wasn't a gift when the recipient tries to skip repayment.

Also, the Common Law takes the view that between Friends, it may be an agreement, but it is not a Contract.

Eg if Joe Bloogs asks out Jane Doe & she fails to arrive at McD's for the big date, i can't sue her as it was a casual agreement, not an enforceable contract.

Maybe talk to a lawyer, that at least shows you are serious about an enforceable contract.

good points..
I lent 30 odd grand to a trusted family member with everything working out nicely for a couple of years and then things started going down hill...
they gave up work, bought heaps of stuff including an investment property(!), had a marrage break up, stopped paying etc.
It all worked out in the end, but there were some dodgy times involved and I could have been down 17 grand!
So it was a totaly unsecured loan and my wife and I could have a year off overseas on \$17,000 instead of working, for them to live it up!

needless to say, that's not going to happen again (at least with them)

take care Thomas

Trev

My old copy of MS Works vs4.5 has Task Wizard/business management/mortgage & loan analysis/standard loan. This is a template for calculating the loan payments etc.

Thanks to all who replied. I was lucky - the first was from DAVESDAD. I am a dad, and have a son David. I thought that's a good omen, went to the link given and found a good template for Excell straight away. Not quite what I wanted but it only needed a little breathing on and it was fine. I also appreciate the advice from others. I think I did point our I am an ex maths teacher and engineer so I knew what to do but I was suffering what I hated in my students, an attack of laziness and incompetance. I have written hundreds of databases and spreadsheets but having been retired for quite a long time just couldn't face trying to get the formaulae right. In fact I rarely use OFFICE - much prefering MSWORKS especially for databases. I shook a salesman up recently by proving I could easily write a flat file database in about 2 minutes. For spreadsheets ASEASYAS is still pretty good for things EXCELL cannot do. The advice about not lending to family members should be noted. I am 72 and have witnessed so many bad things happening that way already. In this case the loan was only small, I kept the recipient out of the hands of the loan shark (30% interest plus expenses), and gave her a lesson in how to borrow, use a spreadsheet and sign legal documentation.
I had completely forgotten the MSWorks wizard to write the document I needed. But it all worked out OK.
Once again thanks to you all.
Tom

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