What causes: Forgetting to divide annual rate by 12

When using PMT, avoid: Forgetting to divide annual rate by 12. Check your formula syntax and parameters.

What causes: Using years instead of months for nper

When using PMT, avoid: Using years instead of months for nper. Check your formula syntax and parameters.

What causes: Surprised by negative result

When using PMT, avoid: Surprised by negative result. Check your formula syntax and parameters.

PMT

Intermediate

Financial

Calculates periodic payment for a loan based on constant payments and interest rate. Essential for loan and mortgage calculations.

Syntax

=PMT(rate, nper, pv, [fv], [type])

Parameters

rate

Required

(number)

Interest rate per period

nper

Required

(number)

Total number of payment periods

pv

Required

(number)

Present value (loan amount)

fv(number)

Future value (optional, default 0)

type(number)

0 = end of period, 1 = beginning (optional)

Examples

Real-world examples to help you understand how to use PMT

Monthly loan payment

=PMT(5%/12, 360, 200000)

Calculates monthly payment for $200,000 loan at 5% annual rate over 30 years

Result: -$1,073.64

Annual payment

=PMT(6%, 10, 50000)

Annual payment for $50,000 loan at 6% over 10 years

Result: -$6,793.40

Common Use Cases

✓Calculate mortgage payments
✓Determine car loan installments
✓Plan loan repayment schedules
✓Compare financing options
✓Budget for debt payments

Pro Tips

💡Result is negative (money you pay out)
💡Divide annual rate by 12 for monthly payments
💡Multiply years by 12 for total months
💡Use consistent time units for rate and nper

Common Errors

⚠️Forgetting to divide annual rate by 12
⚠️Using years instead of months for nper
⚠️Surprised by negative result

Related Formulas

PV FV RATE NPER

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