Xero | How to Record the Loan on Car Purchase

In this video we show you how to record the payment on a fixed asset purchase, such as a new company car, when it has been financed with a loan. We are using Xero for our accounting software.

The example will run through here in Xero can relate to any kind of fixed asset that was financed with a loan. The fixed asset could be anything like machinery, factory equipment, office equipment etc. It doesn't have to be a motor vehicle.

The loan on the vehicle or other asset could be through a chattel mortgage, hire purchase agreement, or any other kind of applicable asset or vehicle financing.

We show you in Xero how to record the deposit payment, and then also the loan for the vehicle that will sit on the balance sheet as a non-current liability.

Thanks for watching.
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[eishsandhu]

You're a life saver, am a small business owner who does my own accounting and your videos are very helpful, especially for doing tax reporting. I appreciate you mate, thanks for doing this!

[AccountsCeramicPro]

Thank you. The best Xero video I so far

[mohamadelias]

Great explanation, very simple to understand. Please keep creating valuable informative videos.

[kerry]

Thank you, I always relied on a bookkeeper to do this.

[jennydraper]

But the loan is not for $29185.70. The loans also has interest and a loan fees - HOW do you add that???

[leonineedham]

What if the loan amount is higher than the amount it paid the assets with? IE The loan has an establishment fee, loan paid vehicle dealer inv $1000 but the loan opening balance is $1200 with fees? How can one update the Liability to have the correct opening balance?

[coolcody]

As others have pointed out it doesn't take into account the interest and fees, also how do we now reconcile the weekly payments etc ??