NetLoan - Calculate Payment (Interest Only) Loans
Use Case: If you have a loan that requires you to make interest payments for the life of the loan, but no principal until the end of the term, this would be considered an interest-only loan. By selecting Calculate Payment (Interest Only) in the schedule calculation type field of NetLoan, you can automate the journal entries associated with this loan.
Note: The rate to be used on the loan must be a known variable.
STEP BY STEP PROCESS
- To set up an interest only loan, follow the instructions detailed in Create a New Loan Record
- When setting the schedule calculation type, ensure that Calculate Payment (Interest Only) is selected.
- Follow the instructions detailed in Establish Payment Details, Establish Interest Rate Details, and Establish the Amortization Schedule
- Once the schedule is generated, you should see the interest calculated as the monthly payment for the duration of the loan, with a balloon payment in the final period for the total of the initial loan balance and any interest accrued in the final period.