Want to calculate loan payments? Use PMT Function.
PMT Function is a part of excel’s most useful financial functions. You can use PMT Function to a calculate loan payment based on fixed monthly payments and constant rate of interest.
You can use PMT Function to a calculate loan payment based on fixed monthly payments and constant rate of interest. For example: If you are purchasing a home for $200000 with an interest rate of 5% for 20 years to pay it off. The monthly mortgage payment will $1319.91.
PMT(rate, nper, pv, [fv], [type])
Suppose you want to take a 20 years mortgage loan for $250000 by assuming 2.5% as an interest rate. Now here we can use PMT Function to calculate your monthly installment.
We will use below formula to calculate it.
In above calculation, we have converted annual interest rate into monthly by dividing with 12. And, years into months by multiplying with 12.
We have not mentioned any future value, and payment type is a default. And, we have a negative value because amount $987.80 you have to pay every month for 30 years.
To learn more about Excel PMT Function you can check Microsoft’s Help Section. And, if you have a unique idea to use it, I would love to hear from you.