Setting Up Loan Accounts

In Pixel Budget, you should use a Loan Account whenever you purchase something using borrowed money — for example, buying a house, a car, or taking out a personal loan.
Let’s walk through an example:
You are buying a new car that costs $50,000.You have $20,000 in savings and take out a $30,000 loan from the bank.
There are two ways to set up your loan account, depending on how the bank transfers the money.


Option A: The bank transfers the $30,000 to your checking account

    Add a Loan Account.
See this page to learn how to add a loan account:  ⁠⁠Adding Accounts⁠ 
Set the starting balance to $0.00.
    Record a transfer from the loan account to your checking account.
See this page for how to add transactions:  ⁠⁠Adding Transactions⁠ 
  • Transaction type: Transfer
  • Amount: $30,000
  • From Account: Loan Account
  • To Account: Checking Account
    After this:
  • Your loan account balance will become –$30,000
  • Your checking account balance will increase by $30,000
    Record the car purchase.
See this page for how to add transactions:  ⁠⁠Adding Transactions⁠ 
  • Transaction type: Expense
  • Amount: $50,000
  • From Account: Checking Account
  • Expense Category: for example Large Purchases / Car


Option B: The bank transfers the $30,000 directly to the car dealer

    Add a Loan Account.
See this page to learn how to add a loan account:  ⁠⁠Adding Accounts⁠ 
Set the starting balance to –$30,000.
    Record the part you paid from your savings.
See this page for how to add transactions:  ⁠⁠Adding Transactions⁠ 
  • Transaction type: Expense
  • Amount: $20,000
  • From Account: Checking Account
  • Expense Category: for example Large Purchases / Car
In this case, you do not need to record a transfer from the loan account because the bank paid the dealer directly.


You Took Out a Loan in the Past and Start Using Pixel Budget Now

If you took out a loan in the past and have already been repaying it, you can still start tracking it properly in Pixel Budget.
Simply:
    Add a Loan Account.
    Set the starting balance to the current outstanding principal balance of your loan.
Make sure you include only the principal amount in the loan balance.
Do not include:
  • Future interest that has not yet been charged
  • Estimated total interest over the full loan term
The loan account balance should always reflect the remaining principal debt only.
Interest will be recorded separately when you make future repayments.


Important Note About Interest

The above setup only records the principal (the borrowed amount).It does not cover how to handle interest payments during repayment.
To learn how to record loan repayments and interest, see this page:  ⁠⁠Repaying Loans⁠