Record incoming Note payments so that principal is reduced

I receive monthly payments from my borrowers. Their deposits show up in my bank account. I need to split each amount between reducing their principal owed, showing interest income to me, and still keep the bank account accurate.


  • UKR
    UKR SuperUser ✭✭✭✭✭
    edited March 6

    In general, this would be similar to you paying your mortgage, where the transaction is a split

    • principal amount transfers to the mortgage account register, e.g. [XYZ Mortgage]
    • interest is categorized to an interest expense category, e.g. Mortgage:Interest

    only in your case, the deposit is a split

    • principal amount transfers to the Lender Loan account register, e.g. [John Doe Loan] thus reducing the balance
    • interest is categorized to an interest income category of your choosing

    Here's an example how such a transaction would look like in my Checking account register:

  • Patience64
    Patience64 Member
    It did not reduce the principal. I'm new to Quicken, fresh off QBs. Maybe I set up my opening balance incorrectly. Under Payee I had 'opening balance', under category I had 'loan name'.
  • Patience64
    Patience64 Member
    I answered my own question by reversing the opening entry. Thank you for your help.
  • UKR
    UKR SuperUser ✭✭✭✭✭

    The loan account register should be an Asset account.
    If the loan already existed when you started using Quicken, your Opening Balance transaction should be a positive amount showing how much you are still owed.
    If you're starting a new loan, the Opening Balance begins with $0.00 and the next transaction records the check you give to the borrower. In your Checking account this check is categorized as a transfer to the [loan account name].

    To make the deposit reduce the outstanding loan balance, you need to categorize the transaction as transfer from Checking to the Loan account. In Quicken that's done by setting the Category to the loan account register name, surrounded by [square brackets], e.g., [Lender Loan 2] in my example.

    I also need to mention that you should set up a Scheduled Reminder with Split details similar to my example. This reminder record the monthly payments.
    Before the deposit is due to arrive, record this scheduled reminder in your Checking account. When you download transactions from the bank containing the deposit, Quicken will match the downloaded deposit to the already existing register transaction.

    How to create a Lender loan (Money I lend someone)

    Please read

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  • Patience64
    Patience64 Member
    Thank you very much.