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Posted by scott s. on January 30, 2007, 2:54 pm
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>>
>> When I set up a loan (and set up the loan payments), it appears that
>> Quicken
>> *DOES NOT* adjust the Interest-Principle split according to my
>> payment date...instead, it uses (apparently) the value that it has
>> already calcuted
>> for the split, assuming that the payment posts to the loan account
>> exactly on the due date.
>>
>> In case that doesn't make sense...let me clarify:
>>
>> If I make my payment a week early, then less interest has accrued,
>> and therefore more of my payment goes to principle. So, If I change
>> the payment
>> date when entering my scheduled payment in Quicken, then I expect
>> Quicken to
>> adjust the split. However, as far as I can tell, Quicken does not do
>> this.
>> What this means, is that every time I make a payment, the split is
>> wrong, and I have to go in and manually change the values for the
>> split, so that my
>> remaining principal balance is accurate.
>>
>> Am I overlooking something here? Does Quicken not have the ability
>> to properly calculate the interest based on the acual payment date?
>
> When you set up the loan Quicken performed an amortization calculation
> for the interest rate and recurring payment dates you chose. Once
> entered, each monthly payment is treated like any other scheduled
> transaction. It seems that you are asking Quicken to examine each
> scheduled transaction at the time of posting to see whether it is
> linked to a loan established within Quicken, and then to adjust the
> splits. I'm sure that kind of dynamic real-time decision making
> software exists, but I haven't seen it in a personal finance program.
There's no decision making required. In my case, the loan payment amount
was fixed. All that is needed is to compute the interest accrued and
payable at the date the transaction is entered, and subtract that from
the total payment amount to determine the amount of principle. My
understanding is that the methods of amortization for consumer loans
is set by regulation, so there shouldn't be any guesswork.
>> I am using Quicken 2006...maybe this is fixed in 2007?
>>
> Fixed?
> I'm not at all sure that it is broken. After all, even the financial
> institution where the loan resides does not compute an accurate
> 'payoff' amount on a daily basis - hence the disclaimer on your
> statement that the principal amount listed is not a payoff amount,
> even if you pay directly on the due date.
> Unless you are talking about a really huge mortgage, the difference
> should be small enough that an adjustment entry once per year (when
> you receive your tax information from your bank) should suffice.
>
Maybe I'm unusual, but if I am going to go to the effort of keeping
a set of books for myself, I would really like accurate data, not
just an estimate. Otherwise I could skip the whole thing and just
accept the 1098 when I get it.
scott s.
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