Should I income the money received from a car loan?

Hi everyone! First, sorry for my rusty english. 

I've received $14k from a car loan to buy it. Should I income this money into an account, and budget it before I buy the car? Or, should I just ignore this income , since I will buy a car soon and use that at all?

It isn't about the loan tracking, because I've read a lot of solutions about this, and I am thinking it's clear to me. It's about the money that I've received to buy the car, if it make sense to income this amount of money into a budget before I expend on the car.

I have made on the second way, but now my report average was influenced, I don't know if it's the best solution. 

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    • QC
    • HaplessFinanceProfessional
    • Queenofcoin
    • 7 mths ago
    • 2
    • Reported - view

    I'd be reluctant to call a loan 'income' because you'll be paying the loan back.  That's negative income AKA an expense.  I get where you're coming from in that you 'receive' the money but since it has to be repaid, I think it's better to call it what it is...debt.

    For that reason I'd treat it like a credit card, enter it as a negative start balance (value of the loan) then apply a goal and/or minimum payment per month to focus your efforts on reducing it.

    Reply Like 2
  • Did this money hit your checking account and then you used your checking account to pay for the car? If so, then yes because your account registers should reflect the reality of what is going on in the actual account. Or are you just approved for a car loan and when you buy the car the loan company will send the money to the car dealer? In that case, I would say no because the money was never actually in your possession.

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      • Joao Lavoier
      • Software Developer
      • jmlavoier
      • 7 mths ago
      • 1
      • Reported - view

      jenmas Yes, the money hit my checking account before I use it. Because this I thought to register this in my checking account, but this money stayed in my checking account just for 2 days. I am confused about the importance to register this money. 

      Reply Like 1
      • jenmas
      • jenmas
      • 7 mths ago
      • 2
      • Reported - view

      Joao Lavoier YNAB is meant to reflect reality so the checking account register in YNAB should match the actual transactions that took place in your checking account.

      Reply Like 2
    • bret
    • bret
    • 7 mths ago
    • 4
    • Reported - view

    So your lender transferred money directly to your checking account, and then a few days later you used that money to purchase a car? I would:

    1. Record the inflow as "Inflow: Car"

    2. Record the purchase as "Outflow: Car"

    3. As you payback the loan, record each installment/payment as "Outflow: Car".

    I would do it this way for reporting accuracy. If you classified the inflow (#1) as "To Be Budgeted", the reports would make it seem like you earned extra income this month (which is not really true.)

    You could optionally add your loan to YNAB as a tracking (liability) account. You could then record #1 as a transfer from the tracking account to your checking account, and then each payment (#3) as a transfer in the other direction. Each of those transfers could be categorized as "Car".

    Reply Like 4
      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 1
      • Reported - view

      bret I know this is an old thread, but this approach distorts the timeline. The fact is you bought the car all at once, and paid debt back over time.

      My advice to others is to not get hung up on the word "income" -- it just means money "coming-in" to the budget. Nothing more. If you try impose a "Salary" connotation on that word, you're going to be fighting this same battle many times over as long as you use YNAB. My preference:

      1. Record the inflow as TBB and budget it toward the car category.

      2. Buy the car, taking the car purchase category to $0.

      3. Budget to a debt repayment category and pay it back over time. The original reason you have this debt is immaterial. After the purchase, I think it's best to think of it as "just debt". 

      Optional: some will use a Tracking account so they see the remaining debt in YNAB. In this case, use transfers from/to the debt account in #1 (still categorized as TBB) and #3 (still categorized as Debt Repayment).

      Reply Like 1
    • TheTabby
    • Just a common cat trying to budget uncommonly well.
    • TheTabby
    • 7 mths ago
    • Reported - view

    In that case, because I like to track the loan, I would create a "Car Loan" tracking account, then transfer the money into your checking - Categorize the transaction as an inflow directly into the Car Replacement category, then spend it all on the car.

    edit: bret said it better though, I had this sitting here a while before I got around to posting the response.

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  • Thank you all, it was helpful a lot. 

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