Extra loan payment without interest

Hi all,

We have a loan with a fixed monthly payment that includes interest. But I can pay off any extra amount which would not include interest at that time.

For example:

Starting balance: 5000

Extra payment: 400

Now the balance should be: 4400

Fixed payment: 200

Now the balance should eg be: 4250 (since interest is payed using this fixed payment)

However, if I do this in the new Loan structure, interest is deducted from the first payment made (in this case from the 400). This makes it so that the total loan balance is incorrect.

Is there something I can do about this?

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

    The Loan "feature", if you can call it a feature, was designed withthe rules of U.S. based mortgages loans in mind. It will not work correctly for any other type of loan or when doing unusual transactions.

    My suggestion to you, as it is to just about everyone else who has used the loan feature and asked a question of this nature, is to not use it because it is fundamentally broken.

    And then if you are so inclined, submit a feature request that explains why the feature that they released is pretty much unusable, so that maybe someday they will actually fix it, unlike almost every other major bug they introduce (they don't mind fixing the small bugs, like having extra spaces in the code that don't affect anything).

    Like 3
  • I don't use the loan "feature" because it doesn't work. From what I've read, even when it is used correctly for the 1 loan type it was implemented to track, the interest figures calculated are not always correct...

    In answer to your question, though, I think you need to have the first payment in a month be the required payment (which includes interest). Any subsequent payment made in the same month will just affect the principal balance.

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  • You're right: the interest is applied with the first payment made. Are you finding your balance is off at the end of the month after your extra payment AND regular payment? At that point, you can Adjust the Balance. 

    Making the Loan Accounts work for wider range of circumstances is a priority for us, so please so submit your experiences so we can add those as data points!

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  • I've just started using it, so I'll have to see how it all works out. So far I'm not really impressed with it. I've submitted a request, will see what it does..

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  • I use a spreadsheet.  The attached image shows the equations.  ($N$3 is the interest rate)

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

      I am curious why you are rounding Columns B and Column H rather than on column F. By not rounding the interest you'll get incorrect interest sums. It will display 2 digits but in reality the interest will be calculated to many decimal places.

      As a simple example, if you calculate 1.222 for three months in a row, when you only display 2 decimal places the column will show 1.22 which is correct for 2 decimal currency calculations but the underlying value is still 1.222. So when you sum them up it returns 3.67 even though the actual real-world currency sum is 3.66.

      P.S. this is the same interest calculation rounding mistake that YNAB makes and why their projected interest for the life of the loan is incorrect.
       

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      • Budget Conquistador
      • Ready for the next big adventure
      • Khaki_Screwdiver.8
      • 2 wk ago
      • Reported - view

      nolesrule i thought that was odd also when i put all the formulas to text. Rounding the interest is the logical approach. I made it several years ago, had to tweek it a lot to understand how the process worked at the time,  then never looked back when it matched my statements.  I probably will change it to round the interest and remove rounding from the others.  Thanks for challenging that.

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      • Budget Conquistador
      • Ready for the next big adventure
      • Khaki_Screwdiver.8
      • 2 wk ago
      • Reported - view

      nolesrule I had a lot of things in there that were just corrections trying to make the numbers match the statements and eliminate errors.  Now that I've lived it with and understand it better, I was able to take a more wholistic view and cleaned it up.  Thanks again.

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      • MXMOM
      • MXMOM
      • 2 wk ago
      • Reported - view

      nolesrule your example totally reminded me of the movie Office Space where they siphoned off the rounding to their own account. 

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

      MXMOM you mean like Superman III? 🤣

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      • MXMOM
      • MXMOM
      • 2 wk ago
      • Reported - view

      nolesrule yes!!! But I have a special place in my heart for office space.  I am an accountant that worked with engineers as a business systems analyst. The speech about "I have people skilIs. I talk to the people so the engineers don't have to!" was my goodbye email when I left. 

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

      MXMOM I love Office Space also. The Superman II comment was on Office Space joke

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      • MXMOM
      • MXMOM
      • 2 wk ago
      • Reported - view

      nolesrule I have heard that. I have never seen Superman II (or the first one either). 

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  • Cornflower Blue Cobra I recommend you look at undebt.it which is free and can handle multiple scenarios where extra payments are made. Then in YNAB just record the loan payment against either a loan category or a tracking account and update balances as needed.

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