I borrowed a money from a friend last November 2014 worth $10,000and mode of payment is everyday I'll give him $400 for one monthbut I wasn'...

Question

I borrowed a money from a friend last November 2014 worth $10,000

and mode of payment is everyday I'll give him $400 for one month

but I wasn't able to pay on daily basis instead

I'm paying him 1,000 a month up to now,

And He told me that I should pay $2,000 for the interest per month

plus another $2,000 for the payment itself,

I just wanna now what should be the ideal interest or should I refuse to pay the interest.

Please help, Thank You!

Answer

This is bad. Why would you even make a deal like this?

If he did not get you to sign a promissory note, then he cannot charge ANY interest at all. He is a fool for loaning this much.

If you decide to be a good friend anyway, then you and he need to sign a proper promissory note which provides for a REASONABLE rate of interest. Your friend is charging way too much in interest to the point where it is usurious under the law. The maximum lawful rate of interest is 16% per year! See http://www.nccob.org/Public/docs/News/Pub And Research/Maximum_Rate_of_Interest.pdf

Your friend is charging way more than that - even at the maximum, the monthly amount would be something like $135.

I would not sign a promissory note if I were you and I would repay the $10,000 as you can - if you can afford $1000 a month then do it. Your "friend" may not like it but its his fault for not getting a signed promissory note.

Now if you already have a signed note and you are not abiding by it, that is different. In that case I would make a new note and expressly state therein that the old note is superceded and cancelled. In the new note I would specify how the loan is to be repaid and provide for a reasonable rate of interest, not to exceed 16% maximum - if I were you, shoot for as low as you can. Attach an amortization schedule - there are plenty of free calculators out there. Provide how the loan is to be repaid; the payments first go to interest and then principal.

Answer

I couldn't agree with Ms. Hunter more. At first, this seemed to be a good friend, but his payment terms are outrageous and unenforceable. At $400.00 a day you would have paid off the loan in less than a month...