1. What is Seller Financing?

Seller financing is when the property seller acts as the bank and provides a loan to the buyer. The promissory note outlines the repayment terms including payment amounts and schedule.

2. How Payment Calculation Works

The calculator uses this simple equation:

Where:

• \( Total \) — The total loan amount in USD
• \( Periods \) — Number of payment periods

Explanation: This calculates equal periodic payments for an interest-free loan where the principal is divided evenly across all payment periods.

3. Importance of Payment Calculation

Details: Accurate payment calculation ensures both parties agree on repayment terms and helps structure the promissory note correctly.

4. Using the Calculator

Tips: Enter the total loan amount in USD and the number of payment periods (e.g., 12 for monthly payments over 1 year). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include interest calculations?
A: No, this calculates equal principal payments only. For interest-bearing loans, a different calculator would be needed.

Q2: What's typical for seller financing periods?
A: Common terms range from 3-30 years, with monthly or annual payments.

Q3: Should this be used for amortizing loans?
A: No, this is for simple equal principal payments. Amortizing loans require more complex calculations.

Q4: Are there tax implications for seller financing?
A: Yes, sellers must report interest income and buyers may deduct interest payments (consult a tax professional).

Q5: What happens if payments are missed?
A: The promissory note should specify late fees and default consequences, which vary by agreement.