Setting up a loan.

When setting up a LOAN I am depositing a portion of the loan to my checking account. What is the best way to enter this in Quicken? I showed it as a transfer from from the loan to my checking, but now the account transferred to checking shows as INTERST PAID on the Property and Debit Tab.

Best Answer

  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    Accepted Answer
    @mark_thompson - That's how it should look. The amount of the loan is debt and debt is most commonly shown as a negative number (think credit card account charges).  If that 1st line Opening Balance transaction were to be shown in the Principal Paid column it would be a negative number, too.
    When you manually reduced that 1st line Opening Balance transaction you reduced the amount of the debt from the original loan amount...essentially a defacto principal reduction payment.
    To get the loan balance back up to the original loan amount you need to add debt (a negative number) back in.  The transfer-to-checking transaction does just that.
    Another way of looking at it is that it is a Principal Payment column.  Monthly Principal Payments are positive numbers because they reduce the debt.  The transfer to checking does the opposite...it increases the debt.
    It is, of course, your choice as to which you would prefer to see.  Speaking from the perspective of a career long financial guy, this is the way I think it should be shown.
    (QW Premier Subscription: R36.45 on Windows 10)

Answers

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    I take it that you're the borrower.
    What type of loan is this, and where is the rest of the money going?
    Also, What Q product are you running and what BUILD of that product.  Do HELP, About Quicken for this info.  AND, if it's there, what's your "Valid Thru" date?
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • mark_thompson
    mark_thompson Member ✭✭
    My previous post has a typo, the last sentence should say: I showed it as a transfer from from the loan to my checking, but now the amount transferred to checking shows as INTEREST PAID on the Property and Debit Tab.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    edited April 2020
    I've also seen this happen with a different situation where I made and set up two 0% interest loans to a family member.  I get repaid monthly in one transaction for the total monthly payment amounts of both loans and I record it as a split category transaction...some of the payment goes toward Loan #1 and some goes to Loan #2.  When I check the Payment Schedule for Loan #1, the amount of the payment for Loan #2 shows up as Interest.  When I check the Payment Schedule for Loan #2, the payment for Loan #1 shows up as Interest.
    When I view Itemized Categories report, this "Interest" shows up nowhere and the payment receipts are properly categorized.  I haven't found these "Interest" amounts being reported anywhere else but in that Payment Schedule.
    I believe it is a program glitch affecting just that Payment Schedule popup.  Hopefully I don't come to regret that later.
    (QW Premier Subscription: R36.45 on Windows 10)
  • mark_thompson
    mark_thompson Member ✭✭
    NotACPA - Yes I am the borrower. Refinanced my house and borrowed some additional $$ for a future purchase. I am using Quicken Deluxe Build 27.1.25.1 valid until November 9, 2020.
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    OK, I'm still confused.  Because a transfer from your loan account (where it's an INCREASE) to your checking account (a Deposit) is  a transfer ... not a debit.
    SO, can you show us that initial transaction in the loan account, with the specific $ blacked out so we can see what you recorded.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    edited April 2020
    @mark_thompson - I'm assuming you set up the transfer to your checking account as a split category transfer in your loan Opening Balance transaction.  When I did that in a test I get the same result you are seeing.
    As I noted in my earlier post, this interest does not show up in any reports that I've looked at.  Also, this split category transaction has no impact on the payment amount nor the future principal and interest schedules. And I've only been able to duplicate this with split category transfers, all of which lead me to believe this is a program glitch.
    Doing this another way eliminates the transfer amount showing up as interest and I think this will resolve your issue:
    • Reduce the Original Balance amount by the amount to be transferred to checking.
    • Add another transaction for "Original Balance" for the amount to be transferred to checking and enter the category as a transfer to checking.
    • Does not change future the payment amount nor the future principal and interest schedules.

    Your thoughts?
    (QW Premier Subscription: R36.45 on Windows 10)
  • mark_thompson
    mark_thompson Member ✭✭
    Boatnmanic - I redid the loan as you describe above. What is interesting is it removed the dollar amount that I transferred to my checking from the "Interest Paid" and now shows up as negative for the same amount in "Principal Paid". I guess I will have to decide if I want the amount transferred to checking to show as an amount of "Interest Paid" or a negative amount of "Principal Paid". I do appreciate your thoughts and input.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    Accepted Answer
    @mark_thompson - That's how it should look. The amount of the loan is debt and debt is most commonly shown as a negative number (think credit card account charges).  If that 1st line Opening Balance transaction were to be shown in the Principal Paid column it would be a negative number, too.
    When you manually reduced that 1st line Opening Balance transaction you reduced the amount of the debt from the original loan amount...essentially a defacto principal reduction payment.
    To get the loan balance back up to the original loan amount you need to add debt (a negative number) back in.  The transfer-to-checking transaction does just that.
    Another way of looking at it is that it is a Principal Payment column.  Monthly Principal Payments are positive numbers because they reduce the debt.  The transfer to checking does the opposite...it increases the debt.
    It is, of course, your choice as to which you would prefer to see.  Speaking from the perspective of a career long financial guy, this is the way I think it should be shown.
    (QW Premier Subscription: R36.45 on Windows 10)
  • mark_thompson
    mark_thompson Member ✭✭
    Boatnmaniac - The more I think about it the more it makes sense. I appreciate your help with this issue.