setting up a car loan

[Phil Frost]

On Thu, Feb 10, 2011 at 12:08:11PM -0800, Harold wrote:
> Thanks, I will try to work from this. If I understand what you are
> saying, don't bother with trying to put in an opening balance when
> setting up the account. 
> 
> So, to be clear, should I set up an asset account for the value of the
> car?
> 
> All I really want to do is set up the loan account so that I can apply
> a payment to the loan balance and also split off the interest paid.
> 
> Is GC capable of figuring the interest each month? I have a
> spreadsheet that will show me an amortization table and can get it
> from there.
> 
> Hope my questions aren't too confusing about what I am trying to do
> (the highlighted paragraph). I just don't want to create any incorrect
> entries.

If you don't want to create an asset account for the car, you could
debit the price of the car to an expense account, rather than an asset
account. However, standard practice is to debit an asset account,
because this allows one to track the value of the car. It represents a
thing you own of significant value that you may later sell, and likely
at that point you will care about what gain or loss you made on the
sale. However, if you (and your local tax laws) don't care about
tracking this, then there is no reason you can't use an expense account
instead.

GnuCash can calculate the loan payments in some cases. See:

http://svn.gnucash.org/docs/head/loanhandling.html

Also there is a loan repayment druid that will ask you some questions
and create a scheduled transaction for you, using the functions
described in the above link.