PMT
Calculates the fixed periodic payment on a loan (or the fixed periodic contribution to reach a savings goal) at a constant interest rate.
PMT answers the question behind every loan amortization schedule and every "how much do I need to save each month" plan: given a rate, a number of periods, and a starting amount, what's the fixed payment each period? The one detail that trips up almost every first attempt is unit matching: rate and nper have to be expressed in the same period as each other. A monthly loan at a 6% annual rate needs 6%/12 as the rate argument, paired with the total number of months as nper, not the annual rate paired with a monthly period count.
Syntax
| Argument | Description |
|---|---|
| rate | Required. The interest rate per period: a monthly loan at 6% annual needs 6%/12 here, not 6% itself. |
| nper | Required. The total number of payment periods over the life of the loan or plan. |
| pv | Required. The present value: the loan amount borrowed now (as a positive or negative number, LearnExcel accepts either sign convention for pv here). |
| fv | Optional. The future value left over at the end: 0 (a fully paid-off loan) if omitted. |
| type | Optional. 0 (default) if payments happen at the end of each period, 1 if at the start. |
A real example: the monthly payment on a car loan
A $25,000 loan at 6% annual interest, paid off over 48 months:
Dividing the annual rate by 12 converts it to a monthly rate to match the 48 monthly periods in nper; skipping that division is the single most common reason a PMT result comes out wildly wrong.
Worked examples
| A | B | C | |
|---|---|---|---|
| 1 | Loan amount | Annual rate | Months |
| 2 | 25000 | 0.06 | 48 |
Common mistakes
- Using an annual rate directly against a monthly nper. The rate needs dividing down to match the payment period: /12 for monthly, /4 for quarterly.
- Mixing up pv's sign and getting confused by a payment that comes back negative. The magnitude is what matters; a negative payment just means money flowing out, in real Excel's convention.
- Forgetting type when a lease or rent is paid at the start of each period rather than the end; it changes the result slightly, and defaults to "end of period" if left out.
Related functions
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