Loans
A loan — a vehicle loan, a mortgage on your building, an SBA term loan — involves three accounts: a liability for what you still owe, an interest expense account for the cost of borrowing, and the bank account that makes the payments. Loans (sidebar or Transactions → Loans) builds the amortization schedule and splits each payment between principal and interest for you.
The accounting picture
When the loan funds:
DR Bank 50,000
CR Long Term Liability — Auto Loan 50,000
Each payment then splits between principal (paying down the liability) and interest (an expense):
DR Long Term Liability — Auto Loan principal
DR Interest Expense interest
CR Bank payment
Early payments are mostly interest; later ones are mostly principal. The amortization schedule shows the split for every payment.
Setting up a loan
Choose Add New Loan and enter:
| Field | Notes |
|---|---|
| Loan Name | For example, Truck loan — 2026 F-150 |
| Loan Account (Liability) | The Long Term or Other Current Liability account that holds the balance |
| Interest Expense Account | Where the interest part of each payment goes |
| Payment account | The bank or credit-card account payments come from |
| Original Amount | The principal at funding |
| Interest Rate (%) | The fixed annual rate, up to three decimals (for example 6.875) |
| Term (Months) | Total length of the loan |
| Start Date and First Payment Date | When the loan funded and when the first payment is due |
| Payment Frequency | Monthly, Bi-weekly, or Weekly |
Solid Accounting calculates the payment amount and builds the full schedule: each payment's date, principal, interest, and balance after. Record the funding itself (the entry above) with Record Deposit or a journal entry.
The amortization schedule
The payment uses the standard formula:
P = (r × PV) / (1 − (1 + r)^−n)
P = payment r = annual rate ÷ payments per year
PV = principal n = number of payments
Each period's interest is the current balance × r; the rest of the payment is principal. The math is done in whole cents, and the final payment absorbs any rounding so the balance ends at exactly zero. Bi-weekly and weekly schedules use 26 and 52 periods a year; they pay down principal faster than monthly at the same rate.
Recording payments
Open the loan, choose Show amortization schedule, and choose Record Payment on the next row. Solid Accounting posts the principal/interest split from the schedule, reduces the loan's current balance, and marks the row Paid. A row can't be recorded twice.
The Loans screen lists your active loans with original amount, current balance, and next payment. The balance matches the loan's liability account in your books.
Loan payments from the bank feed. In Bank Feeds, set the row's type to Loan payment. Add it to one account, or split it into principal, interest and any taxes or insurance your lender collects.
Changing terms. If you edit a loan — a new rate on a variable-rate loan, for example — payments already recorded stay as they are, and Solid Accounting rebuilds the unpaid part of the schedule from the current balance.
Common gotchas
The bank's payment is a cent off. Banks round differently. Post the penny to a rounding expense account with a journal entry.
Extra principal payments. There's no extra-payment button yet. Post the extra amount with Write Check to the loan's liability account, and check the schedule against your lender's statement afterwards; edit the loan's terms if you need the schedule to match.
Refinancing. Pay off the old loan (DR old loan liability, CR Bank — or CR the new loan if the new lender paid it off), mark the old loan inactive, and set up the new loan with its own terms.
Interest-only months. Set the loan up with the terms that start after the interest-only period. For the interest-only months, post DR Interest Expense · CR Bank with Write Check.