Questions about balance/interest calculation for loan accounts

I have a personal loan I converted from tracking to a loan account with the new feature, and I'm curious about how YNAB calculates the principal balance and interest charges for these accounts.

1. I recently made a payment that YNAB calculated went roughly 60% toward interest and 40% toward principal, but the breakdown from my lender is almost the exact opposite. I'm guessing this is because it's using the starting balance transferred over from the original tracking account and isn't taking into account the extra payments I've already made on the loan? Is there a way to update this besides manually adjusting the balance?

2. The principal amount listed under "remaining to pay" in the interest and payment calculator seems to include the unpaid interest charges YNAB calculated for November - is it assuming compounded interest & that amount will factor into December's interest calculation? Or will November's interest change to "paid" and be applied first to the next payment entered for the account?

3. If I needed to enter a balance adjustment to fix #1 and/or correct YNAB's calculated interest charges, how would that affect future payments if it's including interest in the current principal balance?

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  • My suggestion would be to revert back to the tracking account. The loan feature is half-baked and only works properly for a narrow set of circumstances.

    Like 2
      • Annieland
      • I was told there would be no math.
      • Annieland
      • 1 mth ago
      • 4
      • Reported - view

      nolesrule It's funny, I only have a couple of tracking accounts, but I had to go into one a week ago because my husband accidentally resurrected a rarely used CC, and I got the pop-up asking me about converting to a loan account and it was the first I heard of the rollout.  I just looked at that pop-up, and without further research I said "Oh, HELL no" and closed it.  Sad when you just *know* a newly announced feature is going to be a nightmare without even trying it.

      Like 4
      • Silver Elk
      • Silver_Elk.7
      • 1 mth ago
      • 1
      • Reported - view

      nolesrule that's exactly what I was leaning toward. I was really hoping the loan feature would be an improvement, but it doesn't look like there's much point using it if it's actually going to take MORE work than a tracking account to make the numbers line up...

      Like 1
  • I'd have to agree with @nolesrule for now - I tried it out on a small loan , which makes it very easy to compare the amounts to the documents I get from the bank, and I can never get the loan feature to display the same amounts for principal/interest paid. Add to that this new feature "hides" the transactions on the loan side in boxes you need to click open monthly, and the fact that here almost all loans carry a cost of you pay them off before they are due (so it is only interesting if you can pay off big amounts at once, so the interest saved is higher then the cost for early payment), and it makes the feature quite useless to me... 
    It seems to make all kinds of assumptions that are not valid to me. 

    I'd rather they had finally implemented reconciliation for android ;-)  And not the first time they implement features that only think about the way things are being done in the USA....

    In case it helps anyone, I use a tracking account with a starting amount of [number of monthly payments] x [monthly payment amount] (or the total to be paid back including interest amount that is usually clearly displayed on loan contracts here)- that way I also account for the interest. Much clearer.

    Like 2
  • Interest charges in YNAB Loan accounts are calculated based on the balance you owe, the interest rate, and the minimum monthly payment. The app 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. Interest is posted after the payment is made. The estimates in YNAB may not exactly match what you see from your lender—that can depend on when interest is applied to your loan, how they round the interest, etc.

    If you'd like our team to take a look at your specific circumstances and help you fine tune how to set up and use Loan Accounts to fit how this personal loan works we'd be glad to help! Send us a message from your budget.

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      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 1 mth ago
      • 2
      • Reported - view

      Dela The problem is that it then uses the incorrect interest  estimate to represent the actual interest when the payment is posted in YNAB. This creates a cascading effect in that every future calculation will be based on an incorrect principal amount.

      The fix is to do a balance adjustment, and while that will adjust the future estimate, it doesn't change the incorrect breakdown of the payment. it just creates "Other Activity"

      Like 2
    • nolesrule Yep, you're spot on! There's room here to make changes to ensure the interest estimate is more accurate and you can make easier adjustments—including to posted payments. If you are willing, I know our design team would love to hear from you about what needs to be addressed and improved.

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

      Dela The problem is that it looks like the design team never took into account daily interest, which is common on Student Loans and Mortgages, and they never took into account variable interest rates, and they never took into account fees and escrow.  Thankfully I only tested this out on a refinanced Student Loan, which I had backdated all of my transactions to the start of that account from June 2020.  Total interest paid was underestimated by $141.52 and total principal paid was overestimated by $310.44

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  • Throw into the mix having an offset account, which offsets the interest on your loan and YNAB has no idea these even exist... I'm reverting back to the old method as this new loan feature is practically useless. Sorry you guys put all that effort into it!

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