From the first conversation to the last payment.
A loan in NoteHouse follows one sequence. Either the lender or the borrower can start it.
The sequence
Six steps. Each one uses the button named here.
1Create the loan
Choose Create a loan. Enter the amount, the annual rate, the term, how interest is charged, how often payments are due, the first payment date, any late fee, and the governing state.
NoteHouse computes the full schedule as you type, so you see the payment amount and total interest before you commit. The loan is saved as a draft. Nothing has been sent yet.
2Invite the other party
Add the other person’s name and email. They receive a link, create an account, and join the loan. Both of you now see the same terms and the same schedule.
If something needs to change, change it now. Terms are fixed once the note is signed.
3Review and sign the note
Choose Generate promissory note. NoteHouse drafts the note from the terms as a PDF and sends it to the other party. Each party reads it and signs by typing their name.
Each signature records the signer’s name, the time, their IP address, and a hash of the exact document they signed. When both have signed, the note is executed and stored with the loan.
4Mark it funded
The lender sends the money however the two of you agree: bank transfer, check, or cash. NoteHouse does not move the funds.
The lender then chooses Mark as funded and enters the date. The disbursement is posted as the first entry in the ledger, interest starts running from that date, and the loan is active.
5Record payments as they happen
When money changes hands, either party chooses Record a payment and enters the amount, date, method and any reference number. The other party sees it and chooses Confirm receipt, or disputes it if the figures do not match.
A confirmed payment posts to the ledger and the schedule updates. On the Standard plan, NoteHouse sends reminders ahead of each due date and can collect payments by bank debit, which are confirmed automatically.
6Payoff
When principal, interest and fees are all at zero, the loan is marked paid and the record is closed. Both parties keep access to the signed note, the full ledger and every payment.
To settle early, request a payoff statement. It gives the exact amount owed on a chosen date, including interest to that day, and is valid until that date passes.
How interest and schedules work
Written for someone who has not done this before.
The rate on a note is an annual rate. For a loan with monthly payments, NoteHouse charges one twelfth of that rate each month on whatever principal is still outstanding. Quarterly loans charge a quarter of the rate each period, and so on. A loan paid in one lump sum at maturity accrues simple interest by the day.
Interest is posted to the ledger each period as it comes due. A payment is then applied in a fixed order: first to any fees owing, then to the interest that has been posted, and the remainder to principal. Anything paid beyond what is due reduces principal directly, and the rest of the schedule is recomputed from the new balance.
There are three ways to structure repayment.
- Amortizing. The same payment every period. Early on, most of each payment is interest; as the balance falls, more of it goes to principal. The final payment clears the loan. This is how a car loan or mortgage works.
- Interest-only. Each payment covers only that period’s interest, so the balance does not fall. The full principal is due at maturity. Payments are small until the last one, which is large.
- Fixed principal. The same amount of principal every period, plus interest on what remains. Payments start higher and get smaller as the balance falls. Total interest is lower than with an amortizing loan of the same term.
Late fees, if the note has them, are either a flat amount or a percentage of the overdue installment. They are assessed once a payment is past its grace period and they are paid first.
Create the first loan in a few minutes.
The schedule is computed as you type, and nothing is sent until you say so.