How to record a loan‑financed fixed asset purchase in Sage Accounting. This includes journal entries, trade‑ins, and monthly repayment processing.
When you buy a fixed asset and finance it with a loan or installment plan, you must record it in your accounts. Record the original purchase by posting a journal. Include any deposits and fees at the same time as the purchase. To track how much you have left to pay, record your monthly repayments and any interest charged.
Create required ledger accounts
- Click Settings, then Business settings.
- Under Financial Settings, click Chart of Accounts.
- Click New Ledger Account.
- Use these recommended accounts:
| Name | Account number | Category |
| Loan or Installment Plan | 2300 | Chequing, Liability |
| Licenses | 7301 | Expenses |
| Equipment lease and rental* | 7302 | Expenses |
| Installment plan interest | 7901 | Expenses |
*Use this only for a car lease. The category determines where the accounts display on reports. - Select Save.
Example:
A car costs $20,000 with a total purchase cost of $20,475.
Fees: registration $250, title $100, emissions testing $75, documentation $50.
Deposit: $1,000.
- Go to Adjustments, Journals.
- Click New Journal.
- Enter the journal date, reference, and description.
- Enter the following lines:
| Ledger Account * | Details | Debit | Credit |
| Property and Equipment (1500) | The net value of the new asset | 20,000.00 | 0.00 |
| Sales Tax Payable (2310) | Tax on the new vehicle | 2,000.00 | 0.00 |
| Licenses (7301) | Registration, title, testing, and documentation fees for new vehicle | 475.00 | 0.00 |
| Checking (1010) | Bank deposit paid | 0.00 | 1,000.00 |
| Loan or Installment Plan (2300) | Total purchase price less the deposit | 0.00 | 21,475.00 |
- Select Save.
Example:
Old vehicle: cost $15,000, accumulated depreciation $5,000
New vehicle: $25,000 including tax
Trade‑in value: $7,500
Additional fees: $250 registration, $100 title, $75 emissions testing, $50 documentation
Deposit: $2,000
Step 1: Record the disposal of the old asset
- Go to Adjustments, Journals, and click New Journal.
- Enter the date and a reference for the journal. Enter a description if needed.
- Enter the relevant information to record the disposal of the old asset and clear your depreciation, for example:
| Ledger Account * | Details | Debit | Credit |
| Property and Equipment (1500) | Disposal of old asset | 0.00 | 7,500.00 |
| Other Income (4300) | Disposal of old asset | 6,000.00 | 0.00 |
| Accum. Depreciation - Prop&Eqt (1900) | Disposal of old asset | 5,000.00 | 0.00 |
| Other Income (4300) | Disposal of old asset | 0.00 | 5,000.00 |
Step 2: Record the new purchase and loan adjustment
| Ledger Account * | Details | Debit | Credit |
| Property and Equipment (1500) | Net value of new asset | 25,000.00 | 0.00 | Select this check box |
| Sales Tax Payable (2310) | Tax on new vehicle | 2000.00 | 0.00 | Select this check box |
| Licences (7301) | Registration, title, testing, and documentation fees for new vehicle | 475.00 | 0.00 |
| Checking (1020) | Bank deposit paid | 0.00 | 2000.00 |
| Other Income (4300) | Part exchange value | 0.00 | 5000.00 |
| Loan or Installment Plan(2300) | Total purchase price less the deposit and part exchange | 0.00 | 20475.00 |
Example:
Monthly payment: $300
Principal: $250
Interest: $50
- Go to Banking and click the applicable bank account.
- On the New Entry menu, click Expense/Payment.
- On the Other Payment tab, ensure you select the correct bank.
-
Enter the repayment date and reference.
- Enter the total payment amount.
- Add lines:
| Ledger Account | Details | Total |
| Loan or Installment Plan(2300) | Loan or Installment Plan repayment | 250.00 |
| Installment plan interest (7901) | Loan or Installment Plan interest charged | 50.00 |
- Click Save.
To save time, set the first payment as a recurring entry.
- Solution ID
- 240304191535493
- Last Modified Date
- Tue May 26 01:34:25 UTC 2026
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