Car Loan repayments

AjayAjay Member Posts: 2

Not sure how to enter a car loan repayment as the funds were not deposited into my account as described in the "how to account for a loan" section

Comments

  • JordanFromWaveJordanFromWave Administrator Posts: 79 admin

    @Ajay I'd love to hear more about what funds are being used to repay the loan if they were not funds deposited into the business account. Is this a loan that are paid from personal funds? Also, is the loan itself in the business name, or your personal name?

  • AjayAjay Member Posts: 2

    Loan is in business name, funds were paid directly from the lender to the seller never touching any of our accounts and now we make monthly repayments to the lender for the next 5 years, I guess it works the same as a mortgage.

  • Ryan_WRyan_W Administrator Posts: 94 admin

    Hey @Ajay,

    If you're going to account for this car loan, then I recommend using journal transactions for this. So, let’s say the vehicle is $1000, and the bank covers the full $1000. You’d create a “Vehicle Asset” account and “Vehicle Loan” account in the Chart of Accounts page. You’d then record a journal transaction where you debit the asset for $1000, and credit the loan for $1000. You can create a journal transaction in the Transactions page by clicking the "More" tab.

    Did you make a downpayment on the loan? If so, this process would look a little bit different, so don't hesitate to follow up!

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