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Track loans using QuickBooks Loan Manager

When a loan is repaid in regular fixed payments, these repayments usually include both compounded interest and principal installments for the period.
As each successive payment is made, the interest portion gradually decreases and the principal portion increases. The QuickBooks Loan Manager creates an Amortization schedule for the duration of the loan, showing how much of each payment is applied to principal, interest and escrow (additional fees related to the loan). Also, it allows you to make payments for either the regular scheduled amount or additional payments and run the"what-if" scenarios tool to compare different loan choices.

Detailed instruction

Before using QuickBooks Loan Manager, set up the following accounts and vendor in QuickBooks Desktop.

  • Create a vendor for the Bank or Financial Institution issuing the loan, if none already exists.
  • Record the initial loan amount as an opening balance (using New Account window) or as a transaction like journal entry. Make sure to use the loan origination date. If payments have already been made against the loan, you need to enter these as checks, bills or journal entries.
  • Set up an Expense account for interest payments and other fees and charges, if none already exist.
  • Create an Escrow account if necessary.

What is Escrow?

Escrow is a specific portion of a loan that is held in an account by a third-party until the conditions of the loan are met. An Escrow Account is a QuickBooks Asset Account that tracks the escrow portion of a loan payment. Escrow accounts are commonly used to pay taxes and insurance.

To setup an Escrow Account:

  1. From the Lists menu, select Chart of Accounts.
  2. Click Account and select New.
  3. Select Other Account Type, choose Other Current Asset and click Continue.
  4. Enter the name of the account in the Account Name field.
  5. (Optional) In the Description field, enter a brief note or explanation about the account.
  6. Click Save & Close.

 

KB ID# HOW18995
2/21/2017 5:35:12 PM
QYPPRDQBKSWS08 9138 Pro 2017 00acfa