How do I set up my car lease in Quicken

How do I set up my care lease in Quicken.

Best Answer

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Accepted Answer
    How have you accounted for the X number of payments you've made?  I assume it's been a simple entry along the lines of:
    Debit (increase) Some sort of expense Category   $XXX
    Credit (decrease) Cash in Bank Account                $XXX
    If that's the case then one approach would be to simply create a Bill Reminder for the remaining payments. 
    Tools > Manage Bill & Income Reminders > Add > Bill > (Online Bill or Manual Bill)
    When you set this up you'll come to a screen asking for "End date:" and you select from the drop down list "End after" then enter the Y number.  This is the easiest approach.
    Another approach (backup first) would be to set up a loan Account and enter the original start date of the lease, the original amount of the loan, ((X + Y) x $monthly), a 0% interest rate, the number of periods (X + Y), etc.  Quicken will establish an "Opening balance" in the loan Account which should be (Y  x $monthly).  You could then go back to those X number of payments and convert them to "principal" payments against the loan; those payments should equal the Opening balance entry, which you can then delete.  (I said "backup first" because while I believe this should work I haven't actually tried it.) 
    Given what you've said about the lease I'd probably take the simpler "Reminder" approach.

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    This is a question that's impossible to answer definitively as you've provided absolutely no detail behind your question.  Basically you've asked the question with the implicit assumption that "all car leases are the same and all I need is the 'cookbook' recipe", and that's simply not the case.
    From an accounting standpoint there's, supposedly, two types of leases.  There's a "capital lease" that you basically account for as a purchase of an asset where the purchase is financed by a loan, and there's an "operating lease" where you account for a straight rental relationship.  Determining what kind of lease you have depends on all kinds of assumptions about the fair market value of the car, interest rates, present values, residual values, buyout figure, etc., etc., etc.
    I'd suggest simply expensing the monthly lease payment.  Maybe at the end of the lease you'll end up actually owning the car (with a suitable buyout payment) and maybe not and you can account for your car asset then.
  • MarkSr79
    MarkSr79 Member
    I am sorry I didn't explain myself to what is needed. I have already leased my vehicle, it is a 36 month lease, where I turn it in at the end of the lease. i just want to know how to put it into Quicken to show that I have made X amount of payments and have Y amount left to make.
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Accepted Answer
    How have you accounted for the X number of payments you've made?  I assume it's been a simple entry along the lines of:
    Debit (increase) Some sort of expense Category   $XXX
    Credit (decrease) Cash in Bank Account                $XXX
    If that's the case then one approach would be to simply create a Bill Reminder for the remaining payments. 
    Tools > Manage Bill & Income Reminders > Add > Bill > (Online Bill or Manual Bill)
    When you set this up you'll come to a screen asking for "End date:" and you select from the drop down list "End after" then enter the Y number.  This is the easiest approach.
    Another approach (backup first) would be to set up a loan Account and enter the original start date of the lease, the original amount of the loan, ((X + Y) x $monthly), a 0% interest rate, the number of periods (X + Y), etc.  Quicken will establish an "Opening balance" in the loan Account which should be (Y  x $monthly).  You could then go back to those X number of payments and convert them to "principal" payments against the loan; those payments should equal the Opening balance entry, which you can then delete.  (I said "backup first" because while I believe this should work I haven't actually tried it.) 
    Given what you've said about the lease I'd probably take the simpler "Reminder" approach.
  • MarkSr79
    MarkSr79 Member
    Thanks Tom - I will take your advise and use the simpler method. Have a great Sunday!
  • BrianG
    BrianG Member ✭✭
    edited May 28
    I typically set my auto leases as auto loans the way Tom Describes. I do this as I like to track my progress against the lease and also like for the remaining balance of payments to show up in my liabilities on both Accounts Summary and Net Worth reports. I've done this both ways and setting up as a 0% interest loan and applying payments against it provides the best visibility for me. I do recognize that I do not have an offsetting asset but I'm ok with that.
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    "I do recognize that I do not have an offsetting asset but I'm ok with that. "
    Although you certainly can set up a car asset too, and then depreciate that car to its expected trade in value.
  • BrianG
    BrianG Member ✭✭
    edited May 28
    Very true Tom and in the past, I have created an asset for the vehicle based upon Trade-In value. It does get a bit challenging as the actual payoff of the vehicle if you were to trade it is generally much higher than the remaining of the lease payments which tends to lead to an inflated Net Worth. You can work around this but I found it too hard to manage. Personally (and I stress this is my personal preference) is to treat the lease like an unsecured debt as I really don't own the vehicle (asset) but I do owe all of the lease payments (liability). Setting up an auto loan just gives me better visuals.
  • mdscott
    mdscott Member ✭✭
    For my close end Auto lease, I start with a Liability account. The value (Liability) is based on the lease payment times the length of the Lease. The lease is paid automatically out of one of my savings accounts monthly. I have this transaction setup as a transfer from the savings account to the liability account. This process automatically reduces my savings account & my liability account correctly each month.
    I have an automatic Transaction setup to handle this each month. Category is: Auto & Transport:Auto Payment. Transfer Account is to Auto Liability account.
    Net worth report correctly reflects current liability associated with the open remaining payments.
    Process works fine, except that the payment is not reflected as an expense in Budget report. Payment, however, is shown correctly in Category transactions.
    This process seems to work the same in Quicken for Windows or Mac version, I use both.