What is the proper way to account for Principal and Interest in payments/transfers to a loan?

Question

I have tried a few options and think I am missing something, hopefully something simple.

I would like to see my loan payments in the “category by month summary” report. But I can not figure out what combination of split entries are correct.There are just 2 accounts; [Auto Loan] and [Checking]. It seems like it is related to the amount being a transfer and categorized as “Loan Principal”

These are all splits from [Checking]

This one shows the total loan correctly in the report but there is no entry in [Auto Loan]

This one properly deducts the principal from the {Auto Loan] but does not show the principal in the report.

This works but then I have the uncategorized item.

This is the report

This is the Auto Loan account

This is the Checking account

DashQuark · Answer

@UKR Thank you for the information. The principal/interest is handled correctly in the transaction. The only option I see is to do the split in the checking account. The second example is the one you show and does not show up in the report. If I include transfers there are so many that show up and are noise. If I could just include the loan/liability accounts that could work. But, I don't see a way to filter for specific accounts.

UKR · Answer

As @NotACPA tried to explain, you need to set up the loan payment transaction as a Split transaction in your Checking account.

Look at your example #3, but only use the first two lines:

This will correctly reduce the outstanding loan balance by the amount of principal paid.

The interest goes into the Loans:Loan Interest category.

For budgets and other reports be sure to include the Transfer-To the Auto Loan account in the report as if it was an expense and the report will be OK, without the additional (and unneeded) 3rd and 4th split lines.

DashQuark · Answer

Thank you @NotACPA, I tried liability and that did not change the report. The payment still does not show up in the category report. Changing to liability allowed me to change it back to an Auto Loan. It was a generic loan. The Auto Loan setting didn't seem to change the report at all.