New YNAB converted Loan Account Interests amount incorrect

I converted my loan accounts from tracking to the new planner feature. The issue I now have is that the interest calculated is no way near the actual amount (interest % is correctly specified), and I can't seem to find a way to correct the interest amount. I need to be able to also report on monthly actual interest paid for tax purposes. How do I do these?

13replies Oldest first
  • Oldest first
  • Newest first
  • Active threads
  • Popular
  • If you want 100% accuracy go back to using a tracking account.

    The new loan feature is way too rigid. It is designed for one type of loan in one country using one payment frequency and is therefore pretty useless for the rest of us. 

    I like where it's heading, but they need to enable us to change the interest calculations or at least the interest amount each month at a bare minimum.

    Like 5
      • Ordizzle
      • ordizzle
      • 3 wk ago
      • 1
      • Reported - view

      SgtBatten I've noticed the same issue.  I back-filled the data* for an 18-month old refinanced student loan account and the interest payments were underestimated by $141 over that span, and somehow the principal payments were off by even more.  Principal was overestimated by $310.  While this is a variable-rate account, the variation was by .2% or less over the 18 months.

      Rather than using standard reconciliation adjustments, these loan accounts should allow for manual adjustments to interest, as well as for allocating some of the payment to escrow and fees.  Using the tracking accounts, I can accurately and precisely track actual interest, fees, and escrows paid down to the cent.  These new loan accounts have a ways to go.

       

      * I did this by adjusting the payee for all 18 payments, one at a time, to the new account.  Before adjusting the next month, I reconciled the account, and then backdated the reconciliation in the raw data to the date the payment was made.

      Like 1
      • Ordizzle
      • ordizzle
      • 3 wk ago
      • Reported - view

       For a little more color, I used to add separate lines in the tracking accounts for Student Loan Interest (or in the event of mortgages, separate lines for Escrow as well.

      Like
      • SgtBatten
      • "YNAB broke" since 2013
      • SgtBatten
      • 3 wk ago
      • Reported - view

      Ordizzle My mortgage accounts are way simpler than the US ones and i still can't get it to work.

      My mortgage balance decreases by exactly the amount i pay into it. I can split it up into 20 small payments on different days of the month if i want to.

      My balance goes down exactly as much as i pay. then, on the last business day of the month the interest gets charged to the account and the balance changes accordingly. There's no escrow to worry about. Despite this, YNAB is to rigid for the interest amounts to be correct. I backdated one mortgage just 5 months to the beginning and it was out by over $30 in that time just like yours. 

      Like
  • Hi, there! Right now, there isn’t a way to edit the interest calculations in a Loan account. You can, however, update the account’s balance if the interest charge makes that balance inaccurate.

    YNAB uses an amortization formula to calculate interest, compounding interest monthly (regardless of the type of loan) by taking the interest rate, dividing by 12, and multiplying with the current balance. If you're seeing inaccurate interest amounts consistently, I assume there's something about the way your lender processes interest that is different from YNAB's assumptions (your lender rounds interest, the timing when interest is applied is different, etc.). 

    Because you're in a situation where you'll use YNAB to report interest for tax purposes, I think using a tracking account will be better for your needs. Please reach out to our support team if you'd like help transitioning back to a tracking account.

    If you're interested, we would appreciate learning how your lender manages interest so we can make loan accounts even more helpful in the future. If you’d like to share what's going on and what you need with our Product team for consideration, send us a Feature Request.

    Like
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 3 wk ago
      • Reported - view

      Dela The interest is incurred monthly. it does not compound, at least not in a U.S. based conforming mortgage. If it compounded, you'd see a balance increase because it would get added to the principal.

      I've already outlined the myriad of ways that interest can be calculated in previous posts, but I can repeat myself if you like.

      Dividing by 12 means that each monthly period is 1/12 of the year. However some loans determine the period length and thus the calculated interest by actual calendar days in the period so that the fraction is N/365.  Some loans incur interest daily based on 1/365 of the balance or use an average daily balance formula, and with these types of loans, when you make payments effects the interest calculation.

      And some loans due indeed compound the interest if a payment gets skipped, adding it to principal and thus incurring interest on top of interest.

      It's as if YNAB didn't bother to research how other loans work beyond just a conforming U.S.-based mortgage.

      Like
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 3 wk ago
      • 1
      • Reported - view

      U.S. student loans often use the method of daily interest accrual and when a payment is posted, payment covers interest first with remaining amount going to principal, so they calculate the daily rate as 1/365 of the interest rate * number of days since the last payment * the current principal balance.

       

      This works the same way for multiple payments. Every payment pays interest accrued since the last payment using the formula I noted and then applies the remainder to principal. So when you make the payment or payments does matter.

      And you will get wildly different results compared to the  1/12 of a year period simple interest amortization.

      Like 1
      • SgtBatten
      • "YNAB broke" since 2013
      • SgtBatten
      • 3 wk ago
      • Reported - view

      nolesrule Fully agree though purely out of conversational interest i'm surprised to learn that your mortgage interest wouldn't compound?

      My mortgage construct seems so straight forward to me. I borrow $x and the bank calculated interest on the balance every day and charges it once a month. the interest just adds (or really subtracts) from the balance so there is no distinction between paying principal or interest.

       

      Dela How can YNABs design concept and position be that if you want accuracy for tax reasons, don't use this feature. Isn't having a tax deductible mortgage a hugely common thing in the US?

      Like
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 3 wk ago
      • 1
      • Reported - view

      SgtBatten 

      SgtBatten said:
      Isn't having a tax deductible mortgage a hugely common thing in the US?

       Not since the TCJA a couple of years ago., which made itemizing deductions much less common.

      Not gonna get into the details of it.

      Like 1
    • SgtBatten I think your comment also implies that people have tax deductible mortgages. As a millenial, I cannot yet afford a mortgage, so I would also say your question depends on the demographics. 

      Like
      • SgtBatten
      • "YNAB broke" since 2013
      • SgtBatten
      • 3 wk ago
      • Reported - view

      Slate Blue Pilot (2903ac015cdb) It was my understanding that it was common in the US. 

      My point was still regarding the poorly implemented loan feature with inaccurate interest calculations that cannot be edited. 

      Like
      • Steve
      • stevemcgf
      • 2 wk ago
      • Reported - view

      Dela The Loan feature does not work for my use case either. The interest paid varies depending on the day you make the payment. So the i think the interest is compounded daily instead of monthly like you are expecting.

      It's very easy to go back to the tracking account but I can't find a way to delete the loan account.

      Like
    • If the interest is incorrect in Loan account, YNABers can: 

      1. Update the account’s balance if the interest charge makes the balance inaccurate.

      2. Switch back to a tracking account in the web app (adding all steps here in case other folks want to do this, too):

      1. Hover over the closed tracking account and click the pencil icon and click "Re-open."
      2. You’ll see a warning that information will be erased, but that only applies to the information in the Loan account. Since the plan is to close the Loan account and use the Tracking account moving forward, it's okay for the Loan account information to be adjusted. Click "Erase & Re-open."
      3. Remove the balance adjustment in your Tracking account.
      4. Hover over the Loan account and click the pencil icon, then click "Close Account" in the window that pops up. If no payments or balance adjustments have been recorded in the Loan account, you'll see a button to "Delete Account" instead. YNAB will zero out the balance in the account for you and move it to the Closed Accounts list (or delete it entirely). The category that was paired with the account will be unpaired, and you can use that category for your payments to the Tracking account!
      5. If you had any scheduled transactions set up for your Loan account, remember to adjust the payee of those transactions back to your Tracking account.
      6. Create a new Target for the payments category, if you'd like!

       

      Steve If you've already reopened your Tracking account, and simply want to delete the already-closed Loan account, here's how in the web app:

      1. Click All Accounts and enter the name of the closed Loan account in the Search bar.
      2. Select all of the transactions in the Loan account, then delete them. Note that deleting payments will also change the accounts those payments came from. You may need to adjust the budget accounts afterwards!
      3. Hover over the Loan account in the Closed accounts list and click on the pencil icon when it appears.
      4. In the window that pops up, click Delete Account.
      Like 1
Like2 Follow
  • 2 Likes
  • 2 wk agoLast active
  • 13Replies
  • 187Views
  • 6 Following