Error in lending loan calculations

DaisyDoo

I tried posting this in the Business and Rental Property section but after a couple months, got no response and really, I think it is an error in the program for that particular tool.

I will be using the built in Lending tool in Quicken (Home, Business & Rental) to sell a piece of property. To see how this tool works, I made a copy of my data file (since it is not reversible) and set up the lending loan. The plan is for a 5 year (60 month) term but when I set it up, the amortization schedule only shows for 58 payments and the principal amount is different than what the schedule looks like in an excel spreadsheet that I created that represents an accurate payment schedule with 60 payments (the last being slightly less as it never works out perfectly even).

I modified the loan terms to reflect 61 payments and it then calculated the correct principal and interest amounts but still only shows 59 payments in the schedule with the last one being a small balloon payment that is essentially a double payment (so combines payments 59 and 60)

Any clue on to why this is happening ?? A bug in the program ??

splasher

I just tried this for a $10,000.00 loan for 60 months (not 5 years, if it makes a difference).

Here is the bottom of the payment schedule:

As you can see, it has all 60 payments.  When I tested this, the loan started today (not some date in the past), it was for $10K, 5% & 60 months.

I don't know if you did it differently, but it works for me as expected.

DaisyDoo

OK, I finally got back to working on this. I tried several things and it was still not working correctly.

These are screen shots of my last trial. I took an existing property, adjusted the Balance to an even 10K, and set it up with a 60 month term, starting on 09/01/2022 at 5% interest. It all calculates ok except for the number of payments is one short and it combines the final two payments into one and shows 59 payments total. See screen shots. While I can manually make the change for the final two payments, that doesn't address the root issue and I would prefer to figure out why it's doing this.

DaisyDoo

Not sure what happened to the screen shots so trying again.

For some reason, my screen shots are not showing in the body but clicking on the names opens them up.

splasher

Are you following the instructions EXACTLY in the Quicken Help article titled "How do I set up a loan for which I am the lender?" found by searching for "lender loan"? 
I also have no idea of what you did to cause the +/- of $10K on 9/1?
When I do it, I get the following:

DaisyDoo

That Quicken help article is pretty vague. It really only details the steps in setting up a new asset then says follow the prompts to convert to a lending loan.

I set up a brand new asset and could easily duplicate your results. It does not work on an existing asset that has had previous transactions. I adjusted the balance to 10k for testing and set it up and the amortization schedule doesn't calculate correctly.

To make it worse, it ends up the closing day on this transaction will be on the 16th of the month and the buyer will begin with payments on the 1st of the following and subsequent months. That REALLY screws up the schedule as it still tries to stick a payment in on the 16th of the first month following closing. And it doesn't even come close to accurately calculating the partial months interest from the 16th to the end of the closing month.

So, if you want to try my scenario exactly, set up a business asset with an opening balance of $26,586.67 as of 5/5/2019. Make an adjustment to the balance to bring it to $11,210.49 (this adjustment is from down payment, seller covered expenses, etc). This will be the loan amount.

Set the loan up to open on 9/16/2022 with an opening balance of $11,210.49 at a 3% interest rate. It will have a term of 68 months. The payment Should calculate to be $179.48. The first payment will be on 10/1/2022 and continue on the first of each month thereafter.

It SHOULD calculate 15 days of interest ($14.01) for the first payment on 10/1 and then the standard monthly calculated interest each month thereafter.

Payment # 68 should be calculated at $162.91.

If you get these results, I will be surprised.

Appreciate the help regardless.

splasher

The only comment I can add at this point is that you are trying to use the Lender Loan capability in a way that it was not designed to work.  I suggest creating a spreadsheet that does the calculations the way you want it done and manually enter the appropriate transactions in monthly.

DaisyDoo

Well, that's disappointing. The Lending Loan help topic covers how to set up the asset but does nothing to go into details or options on the specifics of setting up and managing the actual loan. Seems it's either a legacy tool that gets no support or a very rudimentary and undeveloped tool. I'll manage a workaround but it would be nice to get some official quicken support for it.

DaisyDoo

OK, So just wanted to post a follow up in case someone else runs into the same issue. Clearly the Lending Loan tool is not widely used and most people probably aren't even aware of it. And after a very painful experience trying to connect with Quicken Support (their system arbitrarily disconnects Chats and Phone calls) I finally had a conversation that lasted long enough to develop at least a workaround for the problem.

During the troubleshooting, the rep asked I try editing the payment entry as shown in the payment schedule. These entries are not editable so I was not able to do that but it gave me the idea to try and simply edit the very first payment when it was entered. I adjusted the principal and interest amounts to match the proper amounts based on a partial month's interest and when entered, it DOES automatically adjust the balance of the payment schedule correctly.

So, not the Most elegant solution but it will work.

Just remember, converting an asset to a Lending Loan is a one way trip so make a copy of your data file and test, test, test to make sure it works exactly how it needs to before editing the actual data file and even then, make a good backup copy before performing the conversion.