Help interpreting loan wording

[Danprado]

What is the name of your state? Florida

This may or may not be an obvious one, but I'd appreciate some guidance here:

Somewhat informal business loan between family members, a short promissory note stating:

"...the principal sum of $10,000 together with interest thereon from date at the rate of 8% per annum until paid."

Assuming no payments ever made:

It is clear that after 1 year $10,800 are owed.

But after 2 years, is the balance:

$11,600 (10,000 + 800 + 800) or $11,664 (10,800 + 864)

In other words, since the wording does not explicitly state "compounding", would that be open to interpretation?

Thanks in advance!

 

[HomeGuru]

In the absence of compound interest expressed, then simple interest is implied.

 

[I AM ALWAYS LIABLE]

My response:

I can't speak for Florida; however, in California, any interest accrued goes to the total principle amount owed, and just keeps adding up - - "bearing like interest"; e.g., even the interest accrues interest once it goes into the "principle column".

But, if a contract states that "the interest shall not bear like interest", then interest only accrues on the initial principle amount and the yearly interest is only added to the total amount owed, and is not compounded.

IAAL

 

[Danprado]

Thanks for the helpful replies.

While the real amount is significantly larger than the 10k example above, and the term is > 10 years, it is good to hear that at least simple vs. compound is a somewhat debatable point.

"a leg to stand on" before invoking legal was the goal.

Thanks again!

P.s.: I AM ALWAYS LIABLE, do you really have > 20k posts? Wow, if so hats off, if at least a small % of those helped folks then your dedication is admirable, thanks for your time!

 

[HomeGuru]

Yes, I also admire IAAL's dedication.

 

[I AM ALWAYS LIABLE]

P.s.: I AM ALWAYS LIABLE, do you really have > 20k posts?

MY RESPONSE: No, not actually. I just figured out how to manually spin the odometer to make it look impressive. I just started posting here three days ago.




Wow, if so hats off, if at least a small % of those helped folks then your dedication is admirable, thanks for your time!

MY RESPONSE: Admirable, dedication? Well, for some, perhaps. Others, however, would surely love to strangle me, draw and quarter me, feed my still-beating heart to me, and then set me ablaze.

But, you're welcome. Hope it helped.

IAAL

 

[Danprado]

Whoa, many apologies Guru!

For some reason I only noticed the post count on the last reply, didn't mean to not ack you.

Kind of naive here, which state are you from? Or if that is not a proper question, is your answer above a general one or do you have knowledge of FL law (we are pretty catatonic here, regardless of age) <g>

Anyway, your succint answer made my day.

 

[HomeGuru]

I was not joking. IAAL is the bomb. You should see his Top Tens.

 

[Danprado]

Actually, I very much appreciate your input.

But at the risk of sounding really crude, I have no idea how you vets here can temper yourselves and keep a straight face at the amount of "victim" posts here (just from a short sampling).

Maybe posting the definition of the word "RESPONSIBILITY" as a header banner would slap some folks into reality.

Oh well, off my soapbox now.

Thanks again for your help!

 

[HomeGuru]

Well, to be honest, the drugs and drinking help a lot.