Many users struggle with loan payments because there are usually three different scenarios:
• Interest only payment: In this case, payments post directly to the Interest Expense account.
• Interest and principal payment: If you’re amortizing the loan over time—your payments include principal and interest— then you’ll have to use two accounts when entering the transaction, both the Interest Expense and the Loan account itself. These amounts will be different each month. Your lender can provide an amortization table, or you can create one in Microsoft Excel.
• Extra principal payment: Extra principal payments are applied directly to the Loan account.
Reconcile your loan balance in QuickBooks against the periodic statement that you receive from your lender. This ensures that your financial statements are correct and helps you confirm that how your lender is applying your principal payments.
