Loan component

 

Loan setup

The loan setup allows you to choose how much money you will be borrowing, the date that you receive the money and how long you will be repaying the loan for.

Interest and capital repayment calculations

The options at the bottom of the loan provide common repayment plans for repaying both the loan capital and the interest. The four options are 'Decreasing payments', 'Fixed payments (compound)' and 'Interest only', and ‘Manual’. Here is what they do:

 

Decreasing payments

You will pay equal capital repayments each month. The interest repayment is calculated on the outstanding loan balance. As the outstanding balance decreases, interest repayments reduce, so your total monthly repayment gradually decreases over time.
 

Monthly repayment calculation

(Initial loan amount / total duration of loan in months) + (outstanding loan balance * annual interest rate / 12 / 100)

Example

Loan amount: £12000     |     Loan duration: 12 months     |    Interest rate: 5% 

Capital repayments each month: £1000 (12000/12=1000).    |    Interest repayments: £50 in the first month. Decreasing after that.

 

Fixed payments (compound)

You will pay the same total amount each month. Interest is recalculated on the remaining balance, so as interest decreases, the capital portion of each payment increases to maintain a constant total payment.

Example

Loan amount: £12000     |     Loan duration: 12 months     |    Interest rate: 5% 

Total monthly payment remains constant, but the split changes: interest decreases and principal increases over time.

 

Interest only (bullet)

You pay only the interest each month, with no principal repayment until the final month. In the final month, the full loan amount is repaid.

Example

Loan amount: £12000     |    Loan duration: 12 months    |    Interest rate: 5% 

Capital repayment: £12000 in the final month.    |    Interest repayments: £50 each month.

 

Manual repayments

This method allows you to set up custom amounts for both capital and interest repayments. You can set interest as a percentage of the outstanding balance or as a fixed amount, and adjust repayment amounts month by month to create varying schedules using the table.

 

Interest Rate

After choosing the method to calculate your interest and capital payments, enter an annual interest rate. Interest repayments will automatically be paid monthly in your reports based on this figure. If you want to model the interest rate changing in a later year press 'Show as table'. This will allow you to enter custom interest rates on a year by year basis. You can also switch to entering the interest rate on a monthly or quarterly level. Keep in mind, payments will always occur monthly.
 

 

Setting up an existing loan

To set up a loan that existed before the start of the plan you will need to first ensure that the loan you have added begins at the very start of the plan. If it does, you will be able to click the tick box saying 'This loan was acquired before the start of the plan.'

 

This will change the loan setup controls and allow you to enter a remaining loan balance amount and a remaining time left on the loan.