I don't see any way to do this except manually but I want to track a loan where the payments are interests only and the interest rate fluctuates monthly. In a perfect world, the system would ask me what the interest rate was this month before posting much like a split transaction will do. I can make an interest only payment or I can pay some of the principle as well.
Has anyone set up a loan like this? Do I just set up a liability account with a balance and do the postings manually between interest and principle (if any) when I post the payment?
I think Quicken can handle this, in a manner of speaking. But whether it would be worth the effort is for you to decide.
You can create interest-only loans in Quicken but not with a variable interest rate; all Quicken loans have a fixed interest rate.
You can, however, change the interest rate on an existing Quicken loan; and that includes interest-only loans.
I think that the payment amount on an interest-only loan is the same as the interest amount for the first payment of a non-interest-only loan for the same term, principal and interest rate. If true, you can create the interest only loan, but let Quicken compute the payment amount (that's against the "rule" for Quicken interest-only loans, but you can fix it later). Once you see the interest amount Quicken computed for the first payment, you can modify the loan and tell Quicken that the payment amount is the amount of that first interest payment.
When the interest rate changes, you can Edit the loan, change the interest rate, tell Quicken to compute the payment amount, note the new *next* interest amount, then Edit the loan again to change the payment amount to that *next* interest amount.
The 3 requirements to create an interest-only loan in Quicken are:
1.) Specify a balloon payment
2.) Make the "original length" and the "amortized length" of the loan the same
3.) Specify the payment amount (do not let Quicken compute the payment amount - see above)
I didn't do any testing for adding principal to your loan payments. I'm pretty sure Quicken will let you do it; and probably will correctly reduce the principal owed. I'm just not sure what effect that will have on the subsequent loan schedule; hopefully, you can work that out.
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