How to setup a Line of Credit
I have a Line of Credit account and I am trying to figure out how to set it up so that I can enter in my payment, for example, $80.00 this month and then create a split that shows that $56.61 went to the principle and $23.39 went to Interest paid. Then my loan will decrease by $56.61. I have been trying to figure this out for the past couple of days and I cannot get it to work. I would think Quicken could handle this as it seems pretty robust, but so far I am stumped on what I am doing wrong. I would appreciate any assistance I can get on this issue.
Answers
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Hello @NWPhotoExplorer,
Thank you for reaching out to the Community and telling us about this issue. I'm sorry to hear you're running into this problem. Could you go into more detail about what is happening and how you have it set up currently?
Quicken tends to treat accounts set up as a Line of Credit more like a credit card. If you're wanting that separation of principle and interest paid, you may want to set it up in Quicken as an Offline Loan rather than as a Line of Credit.
To set up an offline loan, go to Accounts>Add Account. Offline Account is at the bottom of the Add Account window.
By default, it will show Offline Checking, but you can click the dropdown by account type to change it to a Loan.
Once you have selected the appropriate type of loan, it will create the account and there will be a button at the bottom that says Add Loan Terms.
Click that button and it will bring up a screen that lets you fill in the information for the loan.
Then it will give you a chance to select the payment account and decide if you want a bill reminder.
Once you complete the setup, you will be able to view the payments tab to see the information breakdown you wanted.
Thank you.
Quicken Kristina
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I don't know that Quicken Mac has a loan account where you can pay a variable amount each month. They all seem to be loans like mortgages or car loans where you're making a fixed payment every month, and Quicken figures out the payments based on the interest rate & number of payments. The only other account that would work is a Liability account but for that you'll have to figure out the principal/interest split yourself.
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Hi Kristina,
Yes, I set up an Offline account and selected Line of Credit from under Checking as shown in your photos. I didn't pick a loan as there isn't a time frame to pay it back. I just have to pay the minimum payment and interest until it gets back to the $0.00 owed. I guess it's like a credit card, but I get charged interest at whatever the current rate is.
Basically, I want to set up a split that will show money coming out of my checking account and then enter in the amount for Principle and Interest. The principal should lower the total owed, while Interest just goes to pay the bank for the loan. So I am not sure how to enter the details into the split showing money coming from my checking ($80 in my example) and then $56.61 getting applied to the balance and @23.39 as the fee for borrowing the money.
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Just create a split transaction in your checking account with the principal amount as a transfer to the loan, and the interest as an Interest expense:
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> @Jon said:
> Just create a split transaction in your checking account with the principal amount as a transfer to the loan, and the interest as an Interest expense:
I have tried that but I can't seem to get the amounts correct for the total to be correct. It keeps adding in another row. I am not sure what I need to enter for this to work.0 -
The transaction total should be the total payment (principal + interest), not just the principal. Create the transaction in your checking account register, not the loan register.
Also, what version of Quicken are you using? That doesn't look like any recent version of Quicken Mac.
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> @Jon said:
> The transaction total should be the total payment (principal + interest), not just the principal. Create the transaction in your checking account register, not the loan register.
>
> Also, what version of Quicken are you using? That doesn't look like any recent version of Quicken Mac.
I took the screenshot from the web. I am using the latest version on my Mac, but that was at home.
So if I make it from the checking account, is there a way to link the interest paid so I can see how much money I spent over the course of the year on this Line of Credit?0 -
You could create a special category for the interest on that loan so it would show up as a separate line in a category report.. Or you could add a tag to the interest portion of the split & and have a report that only includes transactions with that tag.
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