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?
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.
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.
I agree with the others that there needs to be a way to edit the estimated interest to reflect what the bank has actually charged. YNAB estimated my November mortgage interest to be $250.68. The actual interest charged by the bank is $256.17. All there needs to be is a little edit button to change the estimated interest to reflect the actual interest and my balance would be accurate. What I ended up doing was adding an additional transaction as a bank fee amount of $5.49 and now for November, my loan balance is correct. I haven't figured out if that $5.49 hits the budget somewhere yet. I'll keep trying this new loan format for now but reserve the option to switch back to the old way.