Repayment of Your Policy Loan
When you decide to repay your policy loan back with interest, you may be wondering, “How do I set my repayment terms?”
Well, just like you’re in control of taking that loan, you’re also in control of paying it back. That means you get to set the schedule, you get to set the rates, and you get to set the terms. But if we can provide some advice:
Set the terms just as a third-party would set them for you if you had borrowed money from a third-party.
Before you drive off the lot with your new ride, you know exactly what the terms of repayment are before you leave. Because the financing folks, or the bank, make sure before you sign on the dotted line.
So first, we suggest you operate the same way here with your loans. Treat your money with the same respect that you would treat someone else’s money. After all, you and your money are worth top-dollar. So don’t cheat yourself. The repayments fund your future inside of your banking policy.
So here’s a simple way to set repayment terms and a repayment schedule. Make a call or two and find out what you would’ve had to pay someone else. Find out what the going rate is for the type of financing you’re doing in the marketplace. (Or, to keep it simple, just reach out to your “Tools” Team!)
That car that we mentioned? Maybe it would be a 5-6% loan for 60 months with a third party. You can pay yourself at least that much and put the same amount, or even a little more, in your own system over the same stretch.
Don’t forget, these payments are actually deposits that are going into your system, so you do want to be an honest banker.
That means:
- Repay your loans.
- Charge yourself interest.
- And stick it out until the end of the agreement you made with yourself.
Every extra percent of interest that you charge yourself will help your policy grow. So don’t limit that number either. Set your interest charge and your payment amount and get that money back into your system.
Lets be clear.
When you set up your banking policy, you’ll be creating a miscellaneous account with your current bank or financial institution, to which all these repayments will go. This account will only be for Infinite Banking purposes, so you won’t be auto drafting your phone bill from it or anything of the sort. This money you’re repaying is not going to the insurance company. It is going to this account that is connected to your personal banking policy.
And with every loan, there is always interest owed. You must always pay the interest on your loan. This is the interest the insurance company charges you for using their money instead of your own. (Read this article to find out why that will always benefit you.) The insurance company will send you a statement on your policy anniversary date and will let you know how much the interest is. If you don’t pay the interest, the insurance company will take some of your available cash to pay the loan interest first. Then they will let you borrow the rest. But this goes back to the concept of being an honest banker and doing what would be expected of you if you weren’t the bank.
When you’re ready to get started on creating your financial legacy or if you have more questions, most questions can be answered by watching this video. Start there and then schedule a consult with my team when you’re ready to begin.
