In some cases, you may have a loan that exists before the start date of your forecast, and you need to represent a specific payment schedule for that loan, such as interest-only payments or a balloon payment.
For this scenario, you'll need two separate loan entries in your forecast:
- One entry to represent the pre-existing balance
- One entry to represent the payment schedule
In the example below, we're representing a pre-existing loan with a balance of $50,000, which has 10% interest. As of the start date of the forecast, we'll make interest-only payments on this loan for 12 months and then begin making payments against the principal.
Note: Your loan details will differ from the following example.
Entry #1: pre-existing loan balance
- In the Forecast tab, click Financing:
- On the Financing page, click the Add Loan button:
- Give the loan a name in the top field, then choose Before the plan start date from the pull-down menu:
- Enter the amount you owe. Then under How many payments remain as of your start date, enter 1. Enter a 0% interest rate. Then click Save & Close:
Note: we will represent the 10% interest on our loan in the next entry. The purpose of this entry is just to show the loan as pre-existing the plan's start date.
- As you can see in the table below, the pre-existing balance is now represented, and in the following month there's a payment of the loan in full. We'll represent the rest of this scenario in the second loan entry.
Entry #2: payment schedule
To enter this payment schedule into the forecast, we'll need to know two things ahead of time:
- The amount of the interest-only payments
- The amount of the interest-plus-principal payments
If you aren't sure of these amounts, you may want to consult your lender or do an online search for a loan payment calculator.
- In the Forecast tab, click Financing:
- On the Financing page, click the Add Other button:
- Give this segment of the loan a name and enter the annual interest rate:
- Under Do you expect to pay this money back within 12 months of receiving it? select No, or I'm not sure:
- In the next overlay, enter the full amount of the loan balance (from Step 1) in the first month. Click Next:
- In the last entry, enter your payment schedule. In the example below, we've entered interest-only payment amounts in the first year. Starting in Year 2, enter payment amounts for your interest-plus-principal payments. Then click Create & Exit.
- Click Create & Exit.
In the table below, you can now see the interest-only payments, followed by the interest-plus-principal payments:
Note: LivePlan rounds all amounts to the nearest dollar, so you may need to slightly adjust the amount of some interest-only payments to keep the full loan balance intact.