cancel
Showing results for 
Search instead for 
Did you mean: 
Level 2

Best way to enter a loan payment?

I have a loan set up as a balance sheet account in QBO. I will make an electronic payment to this loan periodically. Should I do it as a "transfer" or as a "journal entry"? I don't need to record the interest with the payment so it could be a transfer (interest is billed and paid separately from principal payments). Thanks!

Solved
Best answer 02-27-2019

Best Answers
Highlighted
Level 12

Best way to enter a loan payment?

Transfer or JE? Neither and never. Transfers are between same type accounts, mostly bank to bank. You are paying a liability from an asset. JE will just mess you up when all you want to do is record a check.

 

Use Write Check for payment against principal (the COA account) and post interest as a charge. To properly do this the easiest a loan of this type should be set up as a credit card type and enter the interest as cc charge. Otherwise you will want to post a zero sum Expense that offsets charged interest to principal 

View solution in original post

5 Comments
Highlighted
Level 12

Best way to enter a loan payment?

Transfer or JE? Neither and never. Transfers are between same type accounts, mostly bank to bank. You are paying a liability from an asset. JE will just mess you up when all you want to do is record a check.

 

Use Write Check for payment against principal (the COA account) and post interest as a charge. To properly do this the easiest a loan of this type should be set up as a credit card type and enter the interest as cc charge. Otherwise you will want to post a zero sum Expense that offsets charged interest to principal 

View solution in original post

Highlighted
Level 1

Best way to enter a loan payment?

I have set up an account for a loan.  When I write out a check for a payment for this loan - instead of entering it as a minus, it adds my payment to the loan.  How can I correct this?

Highlighted
Moderator

Best way to enter a loan payment?

Hello @Mugs,

 

Let's make sure you have selected your liability and expense account as the line item of your check so it will post a payment into your loan account.

  1. Go to the Plus icon.
  2. Under Vendor, select Check.
  3. On the Category section, select your liability account and expense account.
  4. Enter the amount.
  5. Click Save and close.

Here's an article you can read to learn more about how you can manage your loan and payment: Make a loan payment in QuickBooks Online.

 

I've also included this helpful article for more insights about managing your loan: Set up a loan in QuickBooks Online.

 

Keep me posted in the comment section down below if you have any other questions. I'll be always around ready to lend a helping hand.

Highlighted
Level 1

Best way to enter a loan payment?

I make a loan payment monthly. 

My bank transfer the money (send a check) to the Loan's holder (bank account).

However I do not know how to categorize or match it. So how do I record this loan payment? Can you help me?

Highlighted
Moderator

Best way to enter a loan payment?

Hello there, GabrielaIzurieta,

 

Recording a loan payment only takes a few steps. Here's how:

  1. Click the Plus icon.
  2. Select Expense.
  3. In the Payee field, enter the business or person you received the loan from.
  4. Select the bank account holding the loan you'll use to make payments from the Payment account dropdown.
  5. Enter the Payment date and select the Payment method from the dropdown.

To enter the payment:

  1. Select the first line.
  2. From the Category dropdown, select the account you used to track this loan.
  3. Enter the total amount of the loan payment in the Amount field.

Check this article to learn more: Make a loan payment in QuickBooks Online.

 

If you have other questions, don't hesitate to post in the Community.

Need to get in touch?

Contact us