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How do I set up a car loan in QuickBooks?
I recently started up a local door-to-door delivery service that requires me to take out a loan to purchase a vehicle. I have been using QuickBooks to keep tabs on my business expenses, but I can’t figure out some of the specifics. How do I set up a car loan in QuickBooks?
Michael Miserendino · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Starting up a new business is an exciting experience! Tracking expenses can be deflating at first; thankfully, QuickBooks makes adding and tracking a
car loan
a very easy process.First, you need to create an account that tracks the vehicle. To do this, you will need to:
- Select Chart of Accounts found under the Your Company tab
- Click New
- Select Fixed Asset (since your vehicle will (likely) be used for more than a year)
- Select the Detail Type to include specific information about the account
At this point, you should have a blank account with all of the prerequisite information ready to begin tracking your purchase.
Then record your car purchase in the newly created account, entering information like the cost, details about the vehicle, and the date purchased, which will be needed to accurately account for depreciation. Make sure to select Track depreciation of this asset so that a Depreciation sub-account is made for that asset.
You will now need to create a Liability Account which will track and manage all liabilities you have moving forward. To do this, you will need to follow the steps listed in Step One, making sure to select Long Term Liability. Click Next and enter the appropriate details.
The last thing you will need to do is create a Journal Entry that covers the specifics of your assets. To do this:
- Click Create
- Select the Journal Entry option
- Select your Liability Account
- Enter the amount of the loan on the Credit side
- Link the desired Asset Account (in this case, the one with your new vehicle)
- Enter the loan amount again but on the Debit side to balance the ledger
Congratulations! You have now properly tracked your new vehicle. You will need to make sure to update the books regularly as the loan details change, such as payments or any refinancing.
If you feel like your loan is too expensive, refinancing is a great way to save money on your loan’s interest rate. Finding the right lender is time-consuming.
Jerry
removes the hassle by giving you one app that instantly connects you with top companies to meet your financial needs. Jerry compares offers from multiple lenders to make sure you never overpay for your loan. On average, car owners pay $85 less every month by refinancing their auto loan.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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