Loan Transactions

For an introduction to Loan accounts and transactions, see Chapter 11: Managing Debt.

Since a Loan account represents a debt you've incurred, rather than an actual bank account, it is not possible to create new transactions directly in a loan account. Instead, you can create transactions in some other account with the Loan account selected in the Category field. Such a transaction will reduce (or increase) the remaining principal of the loan which is represented as the Loan account's balance.

When a loan is created you'll have the option to schedule periodic payments; we recommend you do this, as it's the easiest way to automatically divide your loan payments into principal and interest. These payments also allow the loan account to keep track of how many payments you have left, as well as how much interest vs. principal you've paid.

Remember that if you are manually creating a payment into a loan account, you'll need to create a Split transaction to divide your payment into principal and interest, or else create two separate transactions to do the same thing. The loan payment reminders mentioned above will do this automatically, but also keep in mind that many financial institutions have different methods of calculating the ratio of principal to interest on their loan payments.