QB Issue Resolution:

cash has to be tracked in QB, you do that by creating a bank type account called cash and funding it

then you use write checks on the cash bank account (do not print the check)

on the expense tab for your transaction

loan liability account 408.45
interest expense 40.50

Only the principal portion reduces the loan, the interest paid does not

Resolution for Issue 'How to record loan interest expense alongside loan payment from cash on hand' available: Yes (Solved).
Source: Intuit Community forum.

How to record loan interest expense alongside loan payment from cash on hand: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

Support for Cash bank account
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Error Recovery for Cash bank account [Canada]
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