Although the terms debt and loan are often used interchangeably in everyday conversation, they have different meanings in Voyant.
Understanding the distinction will help ensure your client's assets, liabilities, and cash flow are modelled correctly.
The easiest way to determine where something belongs is to ask one simple question:
Who owes the money?
- If your client owes someone else, it should be entered as a Debt.
- If someone else owes your client, it should be entered as a Loan.
Debts
A Debt represents money that your client is responsible for repaying.
Because these are liabilities, they reduce your client's net worth and require repayments that become part of the plan's cash flow.
Common examples include:
- Student loans
- Mortgages
- Auto loans
- Credit card balances
- Home equity loans
- Personal loans
Voyant tracks the outstanding balance and models how it is repaid over time.
Loans
A Loan represents money that your client has lent to another person or organisation.
In this case, the loan is considered an asset because your client expects to receive repayments in the future.
Common examples include:
- Money lent to a child
- Money lent to another family member
- A personal loan made to a friend
- A loan made to another individual or business
Voyant models these repayments as future cash inflows to your client's financial plan.
Why is a student loan entered as a Debt?
A student loan is one of the most common examples of the difference between Debts and Loans.
Although it is called a loan, it should be entered as a Debt because the client is the person responsible for making the repayments.
If it were entered under Loans, Voyant would instead assume that someone is repaying your client, resulting in an incorrect cash flow projection and an inaccurate representation of the client's assets.
At a glance
| If your client... | Enter it as... |
|---|---|
| Owes money on a mortgage | Debt |
| Owes money on a student loan | Debt |
| Owes money on an auto loan | Debt |
| Owes money on a credit card | Debt |
| Lent money to a child | Loan |
| Lent money to a family member or friend | Loan |
| Lent money to another individual or business | Loan |
Remember
If you're ever unsure which section to use, simply ask:
Is my client making the repayments or receiving them?
- Making repayments → Enter it as a Debt.
- Receiving repayments → Enter it as a Loan.
This simple rule applies regardless of the type of borrowing and will help ensure your client's financial plan accurately reflects both their liabilities and their assets.