PMT
Calculates the payment for a loan based on constant payments and a constant interest rate.
Syntax
PMT(rate,nper,pv,fv,type)
For a more complete description of the arguments in PMT, see PV.
Rate is the interest rate for the loan.
Nper is the total number of payments for the loan.
Pv is the present value, or the total amount that a series of future payments is worth now; also known as the principal.
Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
Type is the number 0 (zero) or 1 and indicates when payments are due.
Set type equal to |
If payments are due |
0 or omitted |
At the end of the period |
1 |
At the beginning of the period |
Remarks
- The payment returned by PMT includes principal and interest but no taxes, reserve payments, or fees sometimes associated with loans.
- Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.
Tip To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper.
Examples
The following formula returns the monthly payment on a $10,000 loan at an annual rate of 8 percent that you must pay off in 10 months:
PMT(8%/12, 10, 10000)
equals -$1,037.03
For the same loan, if payments are due at the beginning of the period, the payment is:
PMT(8%/12, 10, 10000, 0, 1)
equals -$1,030.16
The following formula returns the amount someone must pay to you each month if you loan that person $5,000 at 12 percent and want to be paid back in five months:
PMT(12%/12, 5, -5000)
equals $1,030.20
You can use PMT to determine payments to annuities other than loans. For example, if you want to save $50,000 in 18 years by saving a constant amount each month, you can use PMT to determine how much you must save. If you assume you'll be able to earn 6 percent interest on your savings, you can use PMT to determine how much to save each month.
PMT(6%/12, 18*12, 0, 50000)
equals -$129.08
If you pay $129.08 into a 6 percent savings account every month for 18 years, you will have $50,000.