New vehicle loan account payout

After nearly 5 years of paying off a work vehicle, I paid out the remaining amount (according to the finance company). However, on my books it is showing $735 remaining. How to I get rid of this amount as nothing is owning?

Note: This amount is listed under “Less Liabilites”

The initial amount was entered incorrectly or else you missed a repayment.
Check with the statements from the bank or finance company

Must have been a wrong initial amount as the finance company sent me the remainder amount to be paid. How would I correct this? Just reduce the initial amount by that sum?

If you reduce the initial, then you will introduce an error in your accounts from that date as either the loan was overstated and/or price paid for vehicle was incorrect

You need to post more information about the beginning of the loan

This does not address the possibility that you may have missed recording a repayment somewhere during the five years. I believe what @Joe91 meant by suggesting you check statements from the finance company was to check all statements that reflect the payments you have made, not just the one that showed the payoff balance.

Look through your records in Manager for the loan (use the Search function) and your paperwork from the initial purchase. Consider these questions:

  • Did you record 58 payments? Your profile says you started your business in April 2014 and joined the forum in May 2014. Is it possible you made one or more payments before you started using Manager? If so, your loan account should have had a starting balance reduced by payments already made.
  • Do recorded principle payments match amounts posted to the loan principle according to the finance company’s statements?
  • Do your postings to interest also match the finance company’s?
  • Is every payment posted to the correct account, or did you possibly post one or more to the wrong account?
  • Why was the payoff balance more than 3 times the previous month’s principle allocation? It would be normal for the principle allocation of of a fixed loan payment to rise a little each month, as your previous payments show. But such a big jump suggests you either have entered something incorrectly or paid off the loan early.
  • Did you erroneously record closing costs for the vehicle as part of the loan? For example, were there one-time administrative or processing charges that were paid to the vehicle dealer but not financed as part of the loan?
  • Was the first loan payment deducted at the time of purchase rather than paid by you? Sometimes this is done to compensate for setup time of your account in the finance company’s system. They want their payment even if they cannot send you a statement in time for you to respond.

Whatever the source of this discrepancy, it is very unlikely it appeared only in month 58 of the repayment schedule.

Thanks Joe and Tut,
I went through from the beginning to the final payout and found three mistakes (allocation of principle and interest). I checked every entry with the principle and interest breakdown graph to make sure everything was in line, which it now is.

However, I have 6 cents remaining in the loan account…Any ideas what do to with that?

I have double checked the initial loan amount. all the way through to the end, with the early payout fees and remaining amount included. I’m not sure what to do with that???

Sounds like a rounding error to write off

How would I go about that?

Given that this is an error in principle applied, I would check the numbers again against the finance company’s statements. If you have been credited by them for exact principle amounts due, and paid off the amount they told you was required to fully discharge the loan, a rounding error seems unlikely.

But, if you finally decide it is accumulated rounding errors, use a journal entry. Debit the loan account for the 6 cents and credit a miscellaneous income account. The finance company says you have paid the loan, but you think you still owe 6 cents. So that is income.

Since I have double checked each monthly repayment with the finance company’s paperwork I will have to do a journal entry. Thanks again for the tips. Much appreciated.