How can I enter a principle only payment on a loan that's not due yet?

Question

I have a student loan that's not due until 2024.  I am sending payments to the loan provider early to reduce the principle.   I don't see it as a category to choose from checking account transaction.   How can I tie checking payment to the student loan to reduce the principle?

Boatnmaniac · Accepted Answer

If you have the loan set up for download from the lender then you cannot do what you want to do because online linked loans do not have account registers.  Downloading from the lender will reduce the loan balance after the payment has been received and the actual payment transaction will then be downloaded from the bank (checking account) once the payment has posted there...but you cannot directly link your checking account transaction to the loan.  Because of this most Super Users recommend against linking loans to the lenders.
If you want to link your loan payments made from your checking account to your loan you need to change your loan to a manual account.  Doing so will then allow you to see the loan account register and you can then link payments transactions directly from your checking account to your loan account via transfer categories (where the category is the account name in brackets...such as in the checking account the transfer transaction would have a category of [Loan Account name]).  If you wish to change to a manual loan you might want to read this thread:  https://community.quicken.com/discussion/7164936/faq-how-do-i-convert-a-loan-account-that-automatically-downloads-transactions-to-a-manual-entry-sc.

Tom Young · Accepted Answer

Payments of principal are not a Category, (Quicken-speak for a current "expense"), instead it's a "transfer" from your checking Account to your Student Loan Account.  You'd enter ["Name of Student Loan Account"] (note the square brackets surrounding the Account's name) in the Category box.You might think of payments of principal as a form of expense but from a pure accounting standpoint it's not.  An expense lowers your net worth, a payment of principal does not, it simply reduces your bank Account and your loan Account by the same amount, leaving your net worth unchanged.  You've lost some amount of an asset (the cash) but reduced a liability (the loan) by the same amount.