The principle part of the payment is not an expense. It reduces the loan balance. The expense was when you took out the loan. it is just moving the money from one pocket to another. Your net worth didn't change. But it is a cash flow item.
As stated above, a transfer to your loan for the principal payment is not an expense. (You can include selected transfers in category reports or your budget if you want treat the transfer as if it's an expense.) But the key is to set up the loan correctly — and you can set the transfer category and the interest category.
Click the + icon atop the left sidebar, and click that you want to select an Offline Account at the bottom:
Own the first of two loans set-up screens, you can define which category to use for interest, as well as escrow or other components of your monthly payment, on the right sideClick where it defaults to Loans: Loan Interest by default if you wish to use a different interest expense category:
Then when you Continue to the second set-up screen, you can specify the account that the payment comes from, and to create a split transaction between principal (transfer to the loan account) and interest expense:
If you want help with including the transfer which is the principal payment in a report of expenses, post back and we can help you with that.
