Paying interest to my private lender

[Alexandra Scardo]

I have a person interested in lending me money for a flip but she’s never lended money and I have never borrowed from a private lender. I know this is basics but I really don’t know.
So let’s say I borrow $10,000 for 5 months at 10% . Just one payment at the end of the 5 months. How much am I paying her? Is it 11k or 15k? Does the 10% interest accrue monthly?  Thank you so much for helping me learn.

[Account Closed]

Quote from @Alexandra Scardo:

I have a person interested in lending me money for a flip but she’s never lended money and I have never borrowed from a private lender. I know this is basics but I really don’t know.
So let’s say I borrow $10,000 for 5 months at 10% . Just one payment at the end of the 5 months. How much am I paying her? Is it 11k or 15k? Does the 10% interest accrue monthly?  Thank you so much for helping me learn.

For private lenders you use simple interest

Usually the interest rate is divided by 12 months. 

So $10,000 @ 10 % interest for 5 months goes like this: 

You start by figuring how much it is for  a year = $10,000 *10% = $1,000 

So, if you paid it back after 1 year you would pay back the borrowed amount plus the interest $11,000

However to figure 5 months, you divide the interest amount of $1,000 by 12 months to get your monthly amount, which is 83.33  (1,000 / 12 = 83.33) and multiple the per month number times the number of months 83.33 * 5 = $416 

So, borrowing $10,000 @ 10% interest for 5 months is $416 interest.

You pay back the original $10,000 you borrowed, plus the interest of $416 so you pay back $10,416 total

Or, as you get better at it you can divide the interest by 12 months and come up with a monthly interest rate like 10% / 12 = .0083333 times the borrowed amount of $10,000 = $83.33 per month.

(banks use compund interest which is calculated differently which is: Payment(interest/12,Number of months,-Amount)

or Payment(10%/12,360,-10,000)