There are several different ways that loan payment transactions can be categorised. We recommend the following approach which works well for both principal and interest loans and interest only loans and results in the total loan payment you make being classified as Spending.
Assuming you are transferring money from a transaction account, savings account or offset account to a loan account you should do the following:
- Categorise the first transaction that withdraws money from the transaction, savings or offset account as a Loan Repayment. This makes sure the total amount of this transaction will show on your Budget and Spending Reports
- Categorise the related transaction that deposits money into you loan account as a Transfer. This makes sure this transaction is excluded from your Budget and Spending Reports (otherwise it would simply net off against the first transaction)
- Categorise any other transactions in your Loan account for things like Interest and Fees and Charges as Transfers. This will make sure that they are also excluded from your Budget and Spending Reports. We know this doesnt seem intuitive, but we dont want to double count these expenses given we have already included the total Loan Repayment as part of your spending in step 1
This approach will ensure that your Budget and Spending Reports show the total amount you have paid off your loan and help you keep track of money.
If you have any questions about how to categorise transactions on your loan accounts don't hesitate to contact us at firstname.lastname@example.org