When will QUICKEN have a simple interest loan option (i.e. Compounding Period of NONE)

DTill

Simple interest loans are lesson 1 in Finance 101, and yet in all the years that Quicken has been around, this not a selectable option when setting up a loan type.

kionysus

A lot of auto loans use simple interest which compounds daily on the unpaid principal balance. Please update Quicken to handle this type of Compounding period in Loan Details.

kionysus

Here are GM Financials calculations as an example.

kionysus

Bank of America's version
https://promo.bankofamerica.com/dotcom/loanservices_olb/pdf/Explanation_of_Simple_Interest_Calculation.pdf

kionysus

The side effect of not having this is I can't actually true up my auto loan in quicken and it assumes that I'm throwing extra money at principal (with no ability to override where the excess goes), which isn't true so the payoff calculator becomes skewed.

RandyUSA1

Is anyone at Quicken Support reviewing these comments? Do they actually CARE about customer experience relating to their products? Hello. Anyone home?

Jim_Harman

Idea posts like this one are reviewed periodically and sometimes implemented. Ideas that have a clear description of the request and why it is important, general agreement among the commenters, and a large number of votes generally get the highest priority. As Ideas move through the review process, their Status next to the vote count changes.

Quicken never says when a problem is expected to be resolved or a new feature implemented.

NotACPA

"compounds daily" is the key here. The interest due on your NEXT payment depends upon whn the bank receives and processes THIS payment,

Q has no way of knowing that.

Your example fails to support your point.

kionysus

I disagree NotACPA. We can always manage the dates and of the transaction and the calculation, for the compounding, should be based on that. I know what day it posted. Either way, it's going to be significantly closer than the monthly compounding option presented now.

mshiggins

1.) Quicken DOES offer the option of a "Daily" loan compounding period - and Quicken has had that option since at least Q2004.  I suspect that the complainants do not realize that they must SCROLL UP in the "Compounding period" dropdown in the "Loan Details" dialog to see the Daily option.  [A Quicken moderator should have been able to clear that problem up.]

2.) Using a daily compounding period will almost certainly NOT "fix" the problem with simple interest loans. It may make the Loan Payment Schedule that Quicken computes closer to what will actually occur as the loan is paid off; but I doubt that Quicken's loan payment schedule will ever agree exactly with the real-world loan principal/interest splits.

The real Quicken problem for simple interest loans isn't the compounding "period" chosen for the loan; what really matters for Quicken users is WHEN the compounding occurs.  In the real-world the compounding occurs on the date the lender receives the payment and applies it to the loan - Quicken has no way to know what date that is. 

In Quicken loans, the compounding is done when the loan is first created. Quicken uses the user-supplied loan terms (including compounding period) and creates a loan payment schedule: all Quicken loan payments are taken from that Quicken created loan payment schedule. Quicken never does any computations when loan payment transactions are entered, Quicken just pulls the scheduled payment - with the principal/interest split already calculated - from the existing loan payment schedule. That process works fine for traditional mortgage loans (because their principal/interest split is the same, no matter what date they are applied by the lender), but not for simple interest loans.

I have no crystal ball nor any inside knowledge; but I doubt that Quicken will ever alter the loan payment process to allow the principal/interest split to be based on the loan payment transaction date. Not only would Quicken likely have to do some serious new coding (for relatively rare transactions: auto loans usually have no more than 60 monthly payment transactions); but I also don't think Quicken would want to be responsible for transactions whose split values would be modified any time the user changed the transaction date (a change that would also cause a change in the loan liability account).

-JP