In some cases, you may purchase an asset by making a down payment and then financing the balance of the cost.
For this scenario, you'll need two separate entries in your forecast:
- An Asset entry representing the item you're purchasing with the loan
- A Loan entry representing the financed amount
Entry #1: Asset purchase with a down payment
In this example, we're representing the purchase of a delivery vehicle. We made a $10,000 down payment upon purchasing the vehicle, and then we're using a loan to finance the balance due of $50,000. The first step then is to enter the asset purchase into your forecast:
- In the Forecast tab, click Assets:
- Click the Add an Asset button:
- Name the asset. Click Next:
- For the example, it's common to choose One-time amount as the asset type. Then enter the full amount of the asset purchase and the month the purchase takes place. Make these choices based on the full value of the asset, not based on any individual payments. If you need help with asset entries, read Entering assets. Click Next:
- Choose the type of asset (Long term or Current), set the useful life of the asset, and select whether or not you plan to resell the asset:
- Click Save & Close to save the entry.
Entry #2: Financing for an asset purchase with a down payment
- From the forecast tab, click Financing
- Click Add a Loan:
- Enter the name of this loan, and select the month when you received it:
- Now enter the amount of the loan. Note that the loan amount is less than the full value of the asset - in our example, the purchase price of our delivery truck is $55,000, but we are only financing $45,000 of that price. The balance of $10,000 was a cash down payment.
- When the details have been entered, click Create Forecast Item:
Do I need a forecast entry for my down payment?
You don't need to make a separate forecast entry for your down payment. Your asset entry represents the cash being spent, and the loan represents cash coming into the company to make that purchase. Since your asset purchase is more than your loan amount, the difference (the down payment amount) will automatically be calculated in your forecast as cash spent.
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