I noticed the other day – okay, it has probably been a couple of months and I’m just getting around to addressing the problem – that Quicken has started to miscalculated the principal and interest on a loan (specifically a mortgage – I don’t know if it’s a problem on all loans).
So I did the first thing most people will do: I searched online for the solution. The most common suggestion was to remove the loan and add a new one. While that will work, it means at best that you get a new loan, and I don’t like that. It’s messy.
Luckily, there is another answer.
The problem appears to stem from the fact that somewhere along the line, some piece of software – likely Quicken, but it might have been Microsoft Money – rounded the interest rate. So if you entered something like 4.375%, it actually calculated (or at least displayed) the rate as 4.38%. This is fine, so long as the calculations were correct. It was not fine if the calculations were not correct, and that is what happened recently.
At some point, the display remained incorrect (showing 4.38%), but the calculation appears to have changed to actually use this displayed value – so the principal and interest were now off in the monthly payment (the “bills” tab of Quicken). To their credit, Intuit did seem to try and address this by manually entering an interest rate change for the updated payment. Or perhaps I did, but I don’t recall doing so. Whatever the case, it’s easy to fix.
I believe it came from an update, simply because one day I received a bunch of late notices in the scheduled bills section for $0 for an old loan that no longer had a balance. It’s like the same thing happened on that loan, and Quicken couldn’t figure it out. So I suspect some sort of internal change accounted for the problem.
To correct the rate, all you have to do is open the account for the loan in question, click the “Account Actions” button, then select “Loan Details”. From there, choose the “Payment Schedule” tab and you can see the payments on the loan. This step isn’t necessary to check or change the interest rate, but it does show you your payments, and if they change over time – this is where I saw that the problem was in fact taking place, and that there was an interest rate change on the loan.
At this point, you can click the “Rate Changes” button on the right, and make sure the correct rate is in effect. Then your payment should be correct. You can even use the list of rate changes to make sure that they are all nice and orderly, if you choose, without extra changes listed. I also fully realize I may be the only one who does this. If so, move along and ignore this last item, because it is not completely necessary.