Loans and debt

Guides

A loan is money you owe and pay back over time. Here's how to record it, budget for the installments and book the interest as spending.

A loan works much like a credit card: it’s a Liabilities account, its balance is what you still owe, and every installment brings that balance closer to zero. The background is in Credit cards and debt.

Set up the loan

In the journal, tap Edit next to Accounts, open Liabilities and add an account for the loan, say “Car loan”.

If you’re already paying off the loan, record what you still owe as its opening balance from Equity, just like the card debt in Accounts. Then continue with the installments below.

Receive the money

When the bank pays the loan into your checking account, record it like this: pick Checking and type 5,000, then pick the car loan and leave it empty.

Car loan paid out

Assets:Checking: +5,000.00
Liabilities:Car loan: −5,000.00
Balanced: 0.00 ✓

The €5,000 counts toward Available in the budget for that month, so you can assign it. Unlike salary, it counts whether it’s cleared or not. Assign it to what you took the loan out for, for example a category “Car”, and record the purchase from Checking as usual.

Pay the installments

Each month, €200 goes from Checking to the bank. Part of it is interest, the cost of the loan, say €20. The other €180 pays off what you owe. Your loan statement shows the split. Set the installment up once as a repeating transaction, with the interest on a line of its own:

Tap ＋ New Transaction, write a Note and set the Date to the first installment.
Pick the loan and type the part that pays it off, €180. Tap ＋ Account, pick an Expenses account “Interest” and type €20. Pick Checking for the third line and leave it empty: Balanced fills in −200.00.
Turn on Repeat with Monthly.
Under End repeat, choose the date of the last installment, or a number of Repetitions. For a loan of 48 installments, that’s 47 after the first. If you’d need more than 50 repetitions (more than 51 installments), pick the end date instead.

Installment · every month

Liabilities:Car loan: +180.00
Expenses:Interest: +20.00
Assets:Checking: −200.00
Balanced: 0.00 ✓

The €180 moves between your own accounts: it pays off debt. The monthly summaries in transaction lists show it as Liability repayment, and the Cash Flow chart shows how much your debts changed overall. The €20 interest is spending, so it shows up in your budget and charts like any other expense. In transaction lists, the installment appears as an expense of €20 for that reason.

This way, the loan’s balance in Balanced follows your loan statement: it drops by €180 each month.

Interest usually shrinks a little each month as the debt goes down. When your loan statement shows new amounts, edit the upcoming installments with This and future transactions: lower the interest and raise the loan’s part by the same amount, so the total stays €200. More about schedules in Repeating transactions.

Budget for the installments

At the start of each month, open the budget editor and split the installment the same way:

€180 to the car loan, in the Liabilities folder,
€20 to the Interest category.

Together, that’s the €200 that leaves your account. Once the installment’s date has come, the loan’s row reads “Repayment of €180.00.” and Interest is fully spent, both with nothing left over. That month, Spent in the budget editor shows €20: the interest is spending, and the repayment only pays off debt.

Want to pay off more than the installment? Assign the extra to the loan first, then pay it. A payment beyond what you assigned counts as overspending and reduces next month’s To assign.

Money someone owes you

Lent money to a friend? Track it with an Assets account, because the money is still yours, just not in your bank. Add one called, say, “Loan to Anna”:

Lent to Anna

Assets:Loan to Anna: +200.00
Assets:Checking: −200.00
Balanced: 0.00 ✓

When Anna pays you back, record the same with the accounts swapped: pick Checking and type what she paid, then pick Loan to Anna and leave it empty. The account’s balance shows what she still owes you.

Lending and getting the money back are transfers between your own accounts, so they don’t change your budget. The €200 still counts as money you have. To avoid planning with money Anna has, lend it from what’s still in To assign, and leave it there until she pays you back.