- 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.
TipTo 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.
| 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) |
Note 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.