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How do you set-up variable rate and interest only loans?

hartlenb

I can't figure out how to handle variable rate and interest only loans. It seems that for all loan types Quicken wants to force P&I payments and a single interest rate? I'm sure that others have had to do this but I can't find the answer in help or by searching this forum. I'm using Home, Business and Rental Property subscription version. Thanks in advance.

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NotACPA

hartlenb said:

Thanks. It's a LOC and the rate changes monthly. I'll delete the recurring bill and manage manually.

OR, you could use the recurring bill as a sort of Reminder ... and still edit the prior month's payment when the next bill arrives.

That way, you'll only have to change the amount and not re-input the entire bill ... which is what I did when I had a HELOC.

You can either create that reminder with a $0 amount ... or with a rough approximation (which would help with paying account projected balances).

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NotACPA

An "Interest Only" loan is simple ... because there's no principal reduction in the loan until you pay it off. Just record each payment with an Interest Expense category.

A variable rate loan gets a bit trickier, depending upon whether it's a "Monthly Interest" loan (such as a mortgage) or a "Daily Interest" loan such as most auto loans.

With more info, we can expend upon this.

hartlenb

> @NotACPA said:
> An "Interest Only" loan is simple ... because there's no principal reduction in the loan until you pay it off. Just record each payment with an Interest Expense category.

The automatic transaction that Quicken creates has both a principal and interest item. I went into that recurring bill and deleted the principal line and it appears to be working. Thanks.

>A variable rate loan gets a bit trickier, depending upon whether it's a "Monthly Interest" loan (such as a mortgage) or a "Daily Interest" loan such as most auto loans.With more info, we can expend upon this.

These loans are simple interest calculated daily. They are not amortized loans.

I guess technically I could delete the recurring bill that Quicken created and add a new one for the interest due that I edit each month based on the # days in the month and the current interest rate?

NotACPA

OK, I hadn't understood that your Var Rate loan was Interest Only also.

Re: that 2nd loan, how often does the rate change? Your suggested answer implies that it changes frequently (daily?). Because most Var Rates that I've dealt with are actually Fixed for some period (3 month?, 6 months?) and then change.

The complicating factor is that the Daily Interest calculations almost always depend upon when the Lender receives, and posts, the prior month's payment, NOT when you make the payment.

So, you're going to have to edit every payment when you get the NEXT month's statement to see how the Lender posted the payment.

hartlenb

Thanks. It's a LOC and the rate changes monthly. I'll delete the recurring bill and manage manually.

NotACPA

hartlenb said:

Thanks. It's a LOC and the rate changes monthly. I'll delete the recurring bill and manage manually.

OR, you could use the recurring bill as a sort of Reminder ... and still edit the prior month's payment when the next bill arrives.

That way, you'll only have to change the amount and not re-input the entire bill ... which is what I did when I had a HELOC.

You can either create that reminder with a $0 amount ... or with a rough approximation (which would help with paying account projected balances).