PMT function

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 the PV function.

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 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.

  • To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper.

Example 1

In the following example:

  • Rate is the annual interest rate.

  • Nper is the number of months of payments.

  • PV is the amount of loan.

Rate

Nper

PV

Formula

Description (Result)

8%

10

10000

=PMT([Rate]/12, [Nper], [PV])

Monthly payment for a loan with the specified arguments (-1,037.03)

8%

10

10000

=PMT([Rate]/12, [Nper], [PV], 0, 1)

Monthly payment for a loan with the specified arguments, except payments are due at the beginning of the period (-1,030.16)

Example 2

You can use PMT to determine payments to annuities other than loans.

In the following example:

  • Rate is the annual interest rate.

  • Nper is the years you plan on saving.

  • PV is the amount you want to have save in 18 years.

The interest rate is divided by 12 to get a monthly rate. The years the money is paid out is multiplied by 12 to get the number of payments.

Rate

Nper

PV

Formula

Description (Result)

6%

18

50000

=PMT([Rate]/12, [Nper]*12, 0, [PV])

Amount to save each month to have 50,000 at the end of 18 years (-129.08)

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