Money 2003-Refi on Auto - Advice


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$2K3 User

I just refinanced my auto loan. I would really appreciate some ideas on
what the group does in this situation.

I updated the balance due on the loan to coincide with the new lenders
balance, but when I tried using Change The Loan Terms, the old balance still
appears. Also, the first payment isn't due until 8/7 but Money won't let me
set a future date.

Thanks!
 
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D

Dick Watson

Your best bet is to create a new loan and payoff the old one. Basic drill:

1) Create a new loan account per terms of new loan.
2) Create a transaction in one of your cash accounts (or in the account that
had out-of-pocket expenses or got cash back in this deal) with splits that
have an income component (Other Income:Loan Principal Received or some
such), a Principal Transfer (balance due to old loan), an interest component
(for the interest due on the old loan and any interest prepaid on the new
loan, and some Misc:Bank Fees or whatever for any costs. The net of this
transaction should be $0 assuming you had no out-of-pocket and got no cash
back, otherwise it should be the cash in or out.
3) Close the old loan account, now at $0 balance.
 
$

$2K3 User

Since I didn't receive cash back I should just zero out the old load and
close it? I can't transfer the balance of the old loan to the new loan
since I created the new loan with the current balance due.
 
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D

Dick Watson

That's one way, and I think maybe we are saying the same thing. Just to be
sure, let's reiterate: the way I'd do it is to create the split transaction
that includes the proceeds of the new loan as an income entry (I created a
category Other Income:Loan Proceeds Received and set it to not appear on any
tax reports and put the name of the new loan account in the memo field so I
can sort this out in the future) and in the next split element, do a
Principal Transfer:Old Loan. You probably also have the case where the new
loan is more than the old loan balance since there is accrued interest you
owe on the old loan on the payoff date. Put in another split element to
expense this interest. The net of these two is $0, but the old loan just got
to $0 balance. Then you can close the old loan account.

Example of this transaction:

Payoff is $2535.45 balance (also balance of Old Loan acct) plus $12.34
accrued interest, new loan $2547.49 (principal of New Loan acct):

Splits:
Other Income:Loan Principal Received $2547.49
Principal Transfer:Old Loan ($2535.45)
Interest Expense:Automobile ($12.34)

Transaction total: $0.00
 

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