Introduction


Loan accounts in MoneyWiz are a complex and powerful tool to manage your debts. These are suitable for various types of loans, such as:

  • Mortgage
  • Student loan
  • Automobile lease and financing
  • Personal loan
  • Small business loan
  • Consolidated loan, etc.


Tracking your loans with MoneyWiz allows you to see the progress of your payments at any time, understand the real value of your purchases by tracking principal and interest separately and provide you with comprehensive reports.


In this guide, we will explain:

  • how to set up loan accounts
  • how their payments and balances are calculated
  • how they affect your budgets and reports
  • how to work with transactions towards loan accounts


The screenshots in this guide are made from an iPad device. Whenever there are differences between the platforms where MoneyWiz is available, these will be described. Please, do not hesitate to contact us in case you have any questions. 


Setting up a Loan account


You can start this process the same way, as you would start setting up any new account. For more information please refer to the Managing Accounts guide. 

 

On the Select Account Type page, please select Loan Account. The information you are required to enter for a loan account is a lot more compared to the other account types, as important calculations are made based on these details. 



Account details


Here is a description of why you need all of these properties

  • Name: this is the name of the Loan account. You can type in whatever feels descriptive enough. For example “Auto Loan”
  • Principal amount: that is the amount of loan which you signed a contract for with your banking or other financial institution; it doesn't include any interests or down payments
  • APR %: APR stands for "Annual percentage rate", it usually includes both the interest and all additional bank fees around your loan
  • Duration: most loans are paid off on a monthly basis, so set the duration with number of months
  • Start date: this is the date when you signed the contract
  • First due date: this is the date when you are required to make your first payment towards this loan; note that it's important to set those correctly as even if you start date and first due date are different, you will be accountable for interests during the time between these two dates and that later affects your entire payment schedule




In the Extended page, all options are the same as for the other types of accounts, but there is one additional option called "Payment Plan". Without filling out the properties of your payment plan you will not be able to complete the Loan account creation. 


Payment plan


Here you will be required to fill out: 

  • Account used for payments: this is necessary so that MoneyWiz can automatically create for you a scheduled transfer and register your past payments towards this loan
  • Category for principal: based on the transaction amounts towards the principal category, the app will calculate the balance of your loan account; this is needed because you make payments consisted of principal and interest, but only the principal part is affecting your remaining balance
  • Category for interest: this is needed so that app can make reports regarding your interest payments - this can help you make important decisions about your finances. Please note that it cannot be the same as the category for Principal.
  • Payee: this is an optional field; you may want to select as payee your banking institution. 
  • Plan type: there are 2 options here - Equal payments and Custom plan, these will be explained later in this guide
  • Payment schedule: with the information that you've entered so far MoneyWiz can make a good prediction of what your payments should look like. The payments are calculated as an amortizing loan - more on this particular type of loan will be explained later in this guide. 




Payment schedule


When you select Payment schedule, you will see a list of your entire payment schedule where all payments will be listed with date, principal amount, interest amount and total amount. At the bottom of this page you will be able to see your total interest, principal and amount. 




The monthly payments are calculated as an Amortizing loan. You can refer to wikipedia to find out what exactly that means if you are not already familiar with the term. Please, note this algorithm takes your principal amount, annual rate and number of monthly payments and additionally we include the extra interest that you pay for the period between the start date and the first due date. 

Attached below is an Excel spreadsheet which calculates using the formula from Wikipedia. The calculated monthly payment in MoneyWiz will match the monthly payment from this spreadsheet if the Start date and the First due date are the same. Enter your Loan account values in D4, C5 and D6.

Please, contact us in case you have a loan that is not an amortizing loan - we are open to providing more algorithms for calculating the loan payments.


Monthly Payment


You can tap on each monthly payment and it will be opened in a new page and allow you to change it. If you selected "Equal payments" for plan type, you will not be able to change the Payment amount of any monthly payment. If you selected "Custom plan" you are allowed to change everything about all of your payments. 

In both cases in order to save the entire payment schedule, please make sure the total principal amount on the bottom of the list is equal to the principal amount that you initially entered.




To create the account press the Done button on the top right corner for iPhone and iPad and on the bottom right for Mac. MoneyWiz asks you if you would like to automatically register your previous payments. 




Please, note that if you choose to register those payments, this will affect the balance of the Account for payments. For the purpose of this guide, we will select the Register option. 




Note that the balance of the Loan account is affected only by the amounts in the principal category, while the balance of the account used for payments is affected by the full amount of the payments.




Transactions towards Loan accounts


The transactions towards Loan accounts are a special type of transactions - these are transfers which allow you to enter category and payee and be splitted by categories to handle separately principal and interest. 

You can manually create transactions towards Loan accounts and enter principal only or interest only payments. Additionally you can create more scheduled transactions towards your loan account (in case you and your spouse are paying off a loan together, but from separate accounts).


Paying off a Loan


Once you are done paying off your loan the balance of the Loan account in MoneyWiz will reach 0. Please, note that deleting the Loan account at this point is not a good option since it contains transfer transactions and deleting those will affect the balances of your other accounts. A better option is moving the account to a group where you keep your retired accounts (old and no longer used accounts). This way the paid off loan will not get in the way of your daily operations, but you will get to keep the history of your transactions.