Microsoft KB Archive/893719

= How to set up an interest-only loan in Microsoft Money =

Article ID: 893719

Article Last Modified on 7/5/2006

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APPLIES TO


 * Microsoft Money Essentials
 * Microsoft Money 2007 Deluxe
 * Microsoft Money 2007 Home & Business
 * Microsoft Money 2007 Premium
 * Microsoft Money 2006 Deluxe
 * Microsoft Money 2006 Premium
 * Microsoft Money 2006 Small Business
 * Microsoft Money 2006 Standard
 * Microsoft Money 2005 Deluxe Edition
 * Microsoft Money 2005 Premium Edition
 * Microsoft Money 2005 Small Business Edition
 * Microsoft Money 2005 Standard Edition
 * Microsoft Money 2004 Deluxe Edition
 * Microsoft Money 2004 Premium Edition
 * Microsoft Money 2004 Small Business Edition
 * Microsoft Money 2004 Standard Edition
 * Microsoft Money 2003 Deluxe Edition
 * Microsoft Money 2003 Standard Edition
 * Microsoft Money 2002 Deluxe Edition

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SUMMARY
''This article describes how to track an interest-only loan in Microsoft Money.

To track an interest-only loan in Money, set up the loan account for the interest-only term of the loan. At the end of the interest-only term, modify the terms of the loan.''



INTRODUCTION
In Microsoft Money 2002 and later versions, to track a loan that has interest-only payments for a preliminary period of the loan term, set up the loan with a term that is equal to this preliminary period.

Additionally, if you make interest-only payments for a preliminary period of a loan term, the loan balance will be equal to the loan amount at the end of this preliminary period. To provide for this loan balance, you must make a balloon payment that is equal to the loan amount during this preliminary period.

At the end of the preliminary period, change the loan terms for the remaining period of the loan.



MORE INFORMATION
A loan is named an &quot;interest-only loan&quot; if the repeating payments do not include any repayment of principal for some period. The payment is made up of interest only during that period. During that period, the loan balance remains unchanged.

To set up an interest-only loan in Money 2002 and later versions, follow these steps:
 * 1) Create a loan account by using a modified term and a Balloon payment.
 * 2) Track the loan during the modified term.
 * 3) Change the loan terms at the end of the modified term.
 * 4) Track the loan until the end of term.

To set up an interest-only loan, see the following example.

Loan details
Loan amount = 100,000.00 Interest rate = 5% Term = 7 years This is an Interest only loan for the first 2 years.

Create the loan account
Create the loan account by using the following details: Loan amount = 100,000.00 Interest rate = 5% Term = 2 years Balloon payment = 100,000.00. To create the loan account in Microsoft Money 2005 and later versions, follow these steps.
 * 1) Start Money.
 * 2) Click Banking, and then click Account List.
 * 3) Under Common Tasks, click Add a New Account.
 * 4) Click Other Account Type (such as loan, asset or watch accounts), and then click Next.
 * 5) In the list of account types, click Loan or click Long Term Loan, and then click Next.
 * 6) Click Track transactions and other details, and then click Next.
 * 7) Follow the instructions that appear on the screen in the New Loan Wizard to continue to set up the loan account until you reach the What is the Original Loan amount dialog box.
 * 8) In the Loan amount box, type 100000, and then click Next.
 * 9) In the Interest rate box, type 5, and then click Next.
 * 10) In the Loan length box, type 2.
 * 11) In the list to the right of the Loan length box, click Years, and then click Next.
 * 12) Leave the Principal+Interest box blank, and then click Next.
 * 13) In the Balloon amount box, type 100000, and then click Next.
 * 14) Click OK, and then click Next.
 * 15) Follow the instructions that appear on the screen to finish setting up the loan account.

To create the loan account in Money 2002, in Microsoft Money 2003, and in Microsoft Money 2004, follow these steps:
 * 1) Start your version of Microsoft Money.
 * 2) On the Accounts & Bills menu, click Account Setup.
 * 3) Click Add a new account.
 * 4) Click Not held at a bank, broker or other financial institution, and then click Next.
 * 5) In the list of account types, click Loan or click Long Term Loan, and then click Next.
 * 6) Follow the instructions that appear on the screen in the New Loan Wizard to continue to set up the loan account, until you reach the What is the Original Loan amount dialog box.
 * 7) In the Loan amount box, type 100000, and then click Next.
 * 8) In the Interest rate box, type 5, and then click Next.
 * 9) In the Loan length box, type 2.
 * 10) In the list to the right of the Loan length box, click Years, and then click Next.
 * 11) Leave the Principal+Interest box blank, and then click Next.
 * 12) In the Balloon amount box, type 100000, and then click Next.
 * 13) Click OK, and then click Next.
 * 14) Follow the instructions that appear on the screen to finish setting up the loan account.

Track this loan account
For the two year period that you set, track this loan account in a typical manner, as you would any other loan account.

Change the terms of this loan account
After the two-year period is completed, change the terms of the loan account by using the following details: Loan amount = 100,000.00 Interest rate = 5% Term = 5 years Balloon payment = 0. To change the terms of the loan account in Money 2005 and later versions, follow these steps:
 * 1) Start Money.
 * 2) Click Banking, and then click Account List.
 * 3) Locate and then click the loan account that you created in the &quot;Create a loan account&quot; section.
 * 4) In the left pane, under Other Tasks, click Change account settings.
 * 5) Under the Loan Terms section, click Change Loan Terms, and then click Next.
 * 6) Click Other Loan Information, and then click Next.
 * 7) In the Effective date list click to select the current date or a past date. You cannot enter a future date in this box. Click Next.
 * 8) Follow the instructions that appear on the screen, until you reach the dialog box where you must enter the Loan length.
 * 9) In the Loan length box, type 5.
 * 10) In the list to the right of the Loan length box, click Years, and then click Next.
 * 11) Make sure that the Prinicipal+Interest box is blank, and then click Next.
 * 12) In the Balloon amount box, type 0, and then click Next.
 * 13) Click OK, and then follow the instructions that appear on the screen to complete the steps of the 'Change account details' task.

To change the terms of the loan account in Money 2002, in Money 2003, and in Money 2004, follow these steps:
 * 1) Start your version of Money.
 * 2) On the Accounts & Bills menu, click Accounts List.
 * 3) Locate and then click the loan account that you created in the &quot;Create a loan account&quot; section.
 * 4) In the left tasks pane, click Change account details.
 * 5) Under the Loan Terms section, click Change Loan Terms, and then click Next.
 * 6) Click Other Loan Information, and then click Next.
 * 7) In the Effective date list click to select the current date or a past date. You cannot enter a future date in this box.
 * 8) Follow the instructions that appear on the screen, until you reach the dialog box where you must enter the Loan length.
 * 9) In the Loan length box, type 5.
 * 10) In the list to the right of the Loan length box, click Years, and then click Next.
 * 11) Make sure that the Prinicipal+Interest box is blank, and then click Next.
 * 12) In the Balloon amount box, type 0, and then click Next.
 * 13) Click OK, and then follow the instructions that appear on the screen to complete the steps of the 'Change account details' task.

Track this loan account until the end of the term
For the five-year period that you set, track this loan account in a typical manner, as you would any other loan account.

Keywords: kbhowto KB893719

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