Loan Terms: Variable Rate, Maturity Date, Credit Lines, etc.

ajcinvest

Hello! Looking for more flexibility in entering loan terms for ARMs, HELOCs and loans I have made to family members, ie, periodic interest changes (the only option now is a fixed rate loan), flexibility in the term. Some of these loans have no fixed payoff date (credit lines) and function more like credit cards, but they are not credit cards.

jacobs

A HELOC should be entered as a credit card in Quicken Mac, because it behave more like a credit card than a loan with no pre-set payments or duration.

As for wanting to handle adjustable rate mortgages, what are you wanting Quicken do be able to do. If you enter an ARM loan as a fixed rate loan in Quicken, when your rate changes, you can edit the loan terms to reflect the new rates. You don't know what future rates will be, or when, to pre-enter those changes, so I'm interested to understand how you think Quicken could handle this better.

For a loan to family members, an improvement to Quicken Mac last summer (version 7.8) added the feature to enter and track a lender loan. If payments are made on a regular schedule, Quicken can automate entry of the transactions just like a mortgage; if payments are irregular, you just enter them as they occur. What functionality are you seeking which the current implementation doesn't provide?

(Suggestion for the future: create a separate Idea post for each feature request, rather than putting a bunch of requests in one like here. Clear and discrete functionality requests are easier for fellow Quicken users to add their votes for, and for the developers to implement.)

ajcinvest

Thank you for your response and suggestions. I don't see that I'm raising a bunch of unrelated feature requests. Rather, the single feature request I am suggesting is to be able to accurately enter very common consumer debt instruments, specifically, HELOC, ARMs and lender loans, by not having to call them something else, or having to play with the current limited options in the software to try to get to a rough estimate of calculations. My responses:

1. Instead of calling a HELOC or credit line personal loan a "credit card", my suggestion is to add the appropriate instruments to the types of liabilities we can choose. Why be forced to call something what it is not? A HELOC is not a credit card, though, yes, they are similar. HELOCs have variable, fixed rate and drawdown periods, all of these terms can be entered into the Quicken Mac if the correct instrument is built in. Some HELOC interest may be deductible on tax reporting; credit card interest never is. As to why: for budgeting and future payment projection. Many find it helpful to do best/worst case scenario projections for planning, which I think is at the heart of what Quicken is, after all. It's helpful for planning to see the difference pay downs and variable interest rates can have on payments. HELOCs have interest rate caps that can be used for best/worst case payment and budgeting projection.
2. Quicken Mac seems to estimate loan payments based on a very basic, one size fits all, plain vanilla fixed rate based solely on the original principal amount amortization. It does not consider current amount outstanding. There is no option to reamortize based on principal pay downs. This limits the ability to accurately reflect estimated payments. In order to do it, you need to fudge the original principal amount to current outstanding, and by doing so, the amortization, accrued interest, are all wrong. These are rather basic loan computations that I was shocked was missing from Quicken Mac.
3. ARMs have periodic adjustment and life of loan interest rate caps. If the accurate instrument was added to the type of loan options (beyond the plain vanilla fixed rate), these terms can be added and a best/worst case payment scenario could be used to project future loan payments.
4. Yes, I have set up a lender loan, which prompted many of these comments. I was hoping to generate a report accurately reflecting accrued interest, cumulative principal paid, effective interest rate (variable interest), etc. within Quicken Mac. Something a little more sophisticated that the spreadsheet I have been using. Instead, Quicken can really only be a basic payment tracker, and I'm back to my spreadsheet. I was honestly surprised by these limitations.

Accurately reflecting consumer debt instruments, period payments, principal pay downs, interest rate caps, computing effective rate of interest are all things that I can imagine Quicken Mac could eventually be able to easily handle. And, I'd argue as a consumer budgeting software would be, at a bare minimum, included. I love what I've been able to do with Quicken so far, and can imagine how much more it can be for those of us that want to use it as more than a bill payment system.