Recording an automobile purchase

mac-n-co
mac-n-co Member
How to make entries for $30K price, $1K down payment, $29K loan.

Best Answer

  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    Answer ✓
    I would suggest that you go to Add Account > +Offline Account > Loan and follow the prompts.  During the process Quicken will set up a Loan Reminder that you can link to your checking account.  The Reminder will include the calculated principal/interest amortization.  Make sure the Reminder is entered (you can set it up so that Quicken will auto enter it each month if you wish) before the loan payment is made...it will enter transfer transactions in both the checking account and the loan register linking them together.  When your payment then later downloads from the bank Quicken will match it to the previously entered Reminder.

    It's OK to set up the car as an asset account and to link the loan to it but I do not recommend setting the loan up as an online connected account.  Offline loan accounts have registers, connected loan accounts do not.  Without a loan account register you cannot link your checking account payment transaction to the loan account and will instead need to use expense categories for the checking account transaction.
    (QW Premier Subscription: R44.20 on Windows 11)

Answers

  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    Answer ✓
    I would suggest that you go to Add Account > +Offline Account > Loan and follow the prompts.  During the process Quicken will set up a Loan Reminder that you can link to your checking account.  The Reminder will include the calculated principal/interest amortization.  Make sure the Reminder is entered (you can set it up so that Quicken will auto enter it each month if you wish) before the loan payment is made...it will enter transfer transactions in both the checking account and the loan register linking them together.  When your payment then later downloads from the bank Quicken will match it to the previously entered Reminder.

    It's OK to set up the car as an asset account and to link the loan to it but I do not recommend setting the loan up as an online connected account.  Offline loan accounts have registers, connected loan accounts do not.  Without a loan account register you cannot link your checking account payment transaction to the loan account and will instead need to use expense categories for the checking account transaction.
    (QW Premier Subscription: R44.20 on Windows 11)
  • mac-n-co
    mac-n-co Member
    Thank you. I was struggling with how to treat the cash down payment transaction. I created the loan account for the total purchase price and applied the down payment against the loan.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    edited January 4
    I would think that would work provided the down payment transaction date and the loan opening balance (the full amount of the car purchase?) date are the same.  Quicken should then calculate the remaining balance of the loan to the be the actual loan amount and then should calculate the amortization schedule accordingly.

    Another way would be to do what I've done with mortgages:
    1. Add Account > +Other Assets & Liabilities > Vehicles > for the purchase price enter $0 > link it to your existing loan if you wish (not absolutely necessary from my perspective) > complete the account set up process.
    2. Assuming you made the down payment from your checking account:  Edit the down payment transaction in the checking account register so that the Category field is a Transfer to your newly created Car account...example:  [name of Car account].
    3. In the Loan account:  Change the Opening Balance transaction to the actual amount of the loan.  Change the Category field to a Transfer to your newly created Car account.  If you previously entered a separate down payment transaction...delete it.
    Now your Car account shows the full purchase price of the vehicle in 2 separate transactions...the down payment transaction from the checking account and the Opening Balance transaction from the Loan account.  You can make market value adjustments (depreciation) in the register going forward so you always know what the approximate value of the car is and that will then be taken into account as an Asset in your Net Worth.

    Now your Loan account will accurately reflect the actual amount of the loan taken out.  This loan will also be appropriately account for as a Debt in your Net Worth.

    This process has worked well for me in the past.  Something you might want to think about.  Let me know if you have any questions about it.
    (QW Premier Subscription: R44.20 on Windows 11)
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