Loan I made to someone else?


8

8900200

Hello - About 9 months ago i setup a loan to a friend. It has an
interest rate of 10% and he's been making varied payments since the
inception($25, $50, etc.) I have them listed in my checking with the
category being the name of the loan account: [Jeff] This enters them
nicely in the Jeff loan account. What I really want it to do is get
Quicken 2004 Premier to calculate the interest and principal activity
that was made between payments? I would have thought it should
calculate each autmatically each time a new payment was logged. Is
there someway to get to what I want here, or does Quickend not even
support this?

Thanks!
Rich
 
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J

John Pollard

8900200 said:
Hello - About 9 months ago i setup a loan to a friend. It has an
interest rate of 10% and he's been making varied payments since
the inception($25, $50, etc.) I have them listed in my
checking with the category being the name of the loan account:
[Jeff] This enters them nicely in the Jeff loan account. What
I really want it to do is get Quicken 2004 Premier to calculate
the interest and principal activity that was made between
payments? I would have thought it should calculate each
autmatically each time a new payment was logged. Is there
someway to get to what I want here, or does Quickend not even
support this?
No, Quicken does not work the way you wish.

It is not clear from your post, when you say you "setup a loan
to a friend", whether you used Quicken's loan wizard to setup
the loan or whether you just created an asset account called
"Jeff". If you did the latter, Quicken will be of no help
whatsoever.

If you use Quicken's loan wizard to setup your loan, Quicken
will create a complete amortization schedule for the loan, where
each payment has its principal and interest calculated. And
Quicken will also give you the option to have each loan payment
controlled by a memorized transaction or a scheduled
transaction. If you do not make use of one of those
transactions when you enter a payment, again, Quicken will not
be of any help.

Further, in my experience (Q2002 deluxe for Windows, US), if
your borrower makes payments of amounts different than called
for in the Quicken payment schedule, Quicken will probably not
get the subsequent principal/interest splits correct, in which
case you would have to make a modification to each of those
subsequent transactions to correct the split.
 
S

Steven Latus

8900200 said:
Hello - About 9 months ago i setup a loan to a friend. It has an
interest rate of 10% and he's been making varied payments since the
inception($25, $50, etc.) I have them listed in my checking with the
category being the name of the loan account: [Jeff] This enters them
nicely in the Jeff loan account. What I really want it to do is get
Quicken 2004 Premier to calculate the interest and principal activity
that was made between payments? I would have thought it should
calculate each autmatically each time a new payment was logged. Is
there someway to get to what I want here, or does Quickend not even
support this?

Thanks!
Rich
With the payments varying by amount and date, it would be best to set
the loan up in a spreadsheet where a running balance can be kept and the
interest can be calculated as required. Then allocate the payments when
recording the payments in Quicken.

Steve
 
8

8900200

Wow - thank you. Too bad they don't support this. I guess I'll have to
do the calculations myself. :(

Take care, and thanks for the feedback.

Rich
 
S

Steven Latus

8900200 said:
Wow - thank you. Too bad they don't support this. I guess I'll have to
do the calculations myself. :(

Take care, and thanks for the feedback.

Rich
Sure. It's really not too hard to set up in a spreadsheet. You can set
it up where the program will calculate the number of days between
payments (based upon the spread between the date of the last payment and
the date of the current payment), the balance outstanding for that
period and the interest rate. That gives you the interest portion of the
payment, which you subtract from the total payment to give you the
principal portion. Then subtract that principal portion from the prior
balance to give you the new balance, ad infinitum.
 
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T

Tom Young

Hello - About 9 months ago i setup a loan to a friend. It has an
interest rate of 10% and he's been making varied payments since the
inception($25, $50, etc.) I have them listed in my checking with the
category being the name of the loan account: [Jeff] This enters them
nicely in the Jeff loan account. What I really want it to do is get
Quicken 2004 Premier to calculate the interest and principal activity
that was made between payments? I would have thought it should
calculate each autmatically each time a new payment was logged. Is
there someway to get to what I want here, or does Quickend not even
support this?
Quicken supports loans that have a regular amortization schedule, like
mortage loans, where you pay (or are paid) a fixed amount of money on
a periodic schedule. Quicken doesn't support - in an automatic way -
loans with ad hoc payment amounts and payment periods. You'll have to
calculate interest on such a loan yourself, according to the terms of
the loan, and then enter a split transaction for each payment; so much
principal to the loan account, so much interest to the Interest Income
category.

Let's say, for simplicity, that the loan calls for a daily calculation
of interest at the annual interest rate on the outstanding balance.
Let's say you lend Jeff $500 and he made the first $25 payment 25 days
later. You'd calculate interest as follows:

$500 times 10% divided by 365 days = $.14 (Daily rate)
$.14 times 25 days = $3.50 (Interest at first payment)
$25.00 - $3.50 = $21.50 (Principal payment)

You'd enter Jeff's first payment as a split transaction with $21.50
going to reduce the [Jeff] account and $3.50 going to your Interest
Income:Jeff category. The [Jeff] account's balance is now $478.50.

If Jeff's next payment of $50 was made 30 days after the first payment
you'd make a new calculation:

$478.50 times 10% divided by 365 days = $.13 (Daily rate)
$.13 times 30 = $3.90 (Interest at second payment)
$50.00 - $3.90 = $46.10 (Principal payment)

and so on.

Of course, your calculations will depend on the terms of your loan to
Jeff, but the concept of making a seperate calcuation for each ad hoc
payment remains the same.

Tom Young
 
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