PLC VS Private lending, how are they compounded?

Question

Is there any difference between a personal line of credit and hard money in the way that they are compounded?

Much of what you would explain to me may go over my head...  How about an example... what would the differences in monthly payments be in a 10K PLC and a 10K HM loan if both were to be paid off in 5 years?

I can call the bank again tomorrow- someone is working on that for me and might have an answer, but I'm trying to do some math and brainstorming tonight. If anyone has an idea I'd be grateful.

Lynn Harrison · Answer

Oh, Charlie, sorry, missed the gist of that. Out here they are 3 to 5 year and not too many interest only loans anymore.

Lynn Harrison · Answer

OK, here's a partial answer for anyone listening in. PLC is compounded differently.

PLC  10K at 10% paid off in 5 years is 250 pr month

Mortgage 10K at 10% paid off in 5 years is 212.47

If the interest rate of the mortgage is increased to 16%, then it would be equal to the payments of a 10% PLC.  HM points maybe $500 for 10K, yearly PLC fees a little over $50. So, PLC total payments 14, 432 plus $50 yearly fees = 14,682 , HMoney 12,748 + 500 = 13, 248.

Looks like it's not practical unless the PLC interest is a lot lower.

Lynn Harrison · Answer

Thanks Charlie, but I'm looking to move a mobile home. Once it's been moved, AFAIK it can not be refinanced. So I'm looking at what it would cost financed with a line of credit. May not be practical.

Charlie Fitzgerald · Answer

HML are interest only payments with most lenders, so you would only pay the interest due on a monthly basis, and sometime at, or before the end of the term, you would pay back tbe principal amount borrowed.

Lynn Harrison · Answer

Oh... lets say both are at 10% interest?