Excel Formula to Calculate Loan Amount Based on Payment with Examples

Calculating loan amount based on payment is a common financial task that can be easily accomplished in Excel using the right formula.

The formula to calculate loan amount based on payment is the PMT function, which stands for payment.

The PMT function takes three arguments: the loan amount, the interest rate, and the number of payments.

For example, if you want to calculate the loan amount for a $1,200 monthly payment with an interest rate of 6% and 60 months, you can use the formula =-PMT(6%/12, 60, -1200) to get the loan amount of $14,195.

This formula works by reversing the PMT function, which is why we use the minus sign before the PMT function.

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The PMT formula is relatively straightforward to use. To calculate the loan amount based on the payment, you'll need to know the interest rate per period, the number of payments, and the loan amount.

The interest rate per period is typically an annual figure, so you'll need to divide it by 12 to get the monthly rate. For instance, an annual rate of 6% becomes 0.06/12 = 0.005 monthly interest rate.

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You can use the PMT formula to calculate the monthly payment, which is useful for determining the loan amount. For example, PMT(0.005, 120, 200000) calculates the monthly payment based on a 6% annual interest rate, 120 total payments, and a $200,000 loan amount.

Here's a table summarizing the components of the PMT formula:

The PMT function in Excel is a powerful tool for calculating loan payments. It requires several parameters to calculate the periodic loan or investment payment accurately.

The PMT function computes the fixed monthly payment required to repay a loan, considering constant payments and a constant interest rate over the loan's duration. Its components include the interest rate per period, the total number of payments, and the loan amount.

To use the PMT function, you need to know the interest rate per period, the total number of payments, and the loan amount. For instance, to find the amount of a periodic payment on a $5,000 loan with an 8% annual interest rate and a duration of 3 years, you can use the PMT function.

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The formula for the PMT function is =PMT(rate, nper, pv), where rate is the interest rate per period, nper is the total number of payments, and pv is the loan amount. For example, the monthly payment for a $5,000 loan with an 8% annual interest rate and a duration of 3 years would be =PMT(8%/12, 3*12, 5000).

The PMT function can be used to calculate different types of loan payments, including weekly, monthly, quarterly, and semi-annual payments. To calculate these payments, you need to adjust the rate and nper arguments according to the payment frequency.

Here's a table summarizing the adjustments needed for each payment frequency:

For example, to find the weekly payment for a $5,000 loan with an 8% annual interest rate and a duration of 3 years, you would use the formula =PMT(8%/52, 3*52, 5000).

The PMT function in Excel has four main components: Rate, Nper, Pv, and Fv. The Rate component is the interest rate per period, which is typically an annual figure that's divided by 12 to get the monthly interest rate.

To calculate the monthly interest rate, you simply divide the annual interest rate by 12. For example, an annual rate of 6% becomes 0.06/12 = 0.005 monthly interest rate.

The Nper component is the number of payments for the loan, also known as the loan term. This is calculated by multiplying the number of years by 12. For instance, a 10-year loan involves 120 monthly payments (10 years * 12 months/year).

The Pv component is the present value, or the total amount borrowed. This is the original amount borrowed, and it's used as the initial amount for the loan.

The Fv component is the future value, which is the cash balance you aim to have after the last payment. If omitted, Excel assumes it to be 0, implying that the loan will be fully paid off by the end of the term, and there will be no balance left.

Here's a summary of the PMT function components:

Keep in mind that the Rate and Nper components are required, while Pv and Fv are optional. If you omit Fv, Excel assumes it to be 0, and if you omit Pv, it's assumed to be the loan amount.

Calculating loan amount can be a straightforward process in Excel, especially if you know the right formula. To calculate the original loan amount, you can use the formula =PV(C3/12, C5, C4, 0), where C3 is the interest rate, C5 is the number of total payments, and C4 is the monthly payment.

You can select cell C9 to enter this formula and press Enter. The formula will return the original loan amount.

To make a loan payment calculator, you can use Excel formulas. You'll need to enter the loan amount, interest rate, and loan term in separate cells.

Create a drop-down list for payment frequency with options like weekly, monthly, quarterly, and semi-annual. Set up a lookup table with text labels matching the drop-down list items.

Use IFERROR VLOOKUP formulas to pull the number of payments per year from the lookup table. For example, for weekly payments, the formula would be: =IFERROR(VLOOKUP(B6, E2:F6, 2, 0), "")

Write a PMT formula to calculate the periodic payment based on the selected payment frequency and loan details. The formula would be: =IFERROR(-PMT(B4/C6, B5*C6, B3, 0, C7), "")

To display the payment frequency label, concatenate the selected value with the text " Payment". For example: =B6&" Payment"

You can hide the lookup tables and add formatting touches to create a user-friendly calculator.

To help you master calculating loan amounts, I recommend downloading the practice workbook for download, specifically the PMT formula in Excel - examples(.xlsx file). This workbook will give you hands-on experience applying the PMT formula to real-world scenarios.

The PMT formula in Excel is a powerful tool for calculating loan amounts. With this formula, you can easily determine the monthly payment for a loan based on the principal amount, interest rate, and number of payments.

To get started with the practice workbook, simply download the PMT formula in Excel - examples(.xlsx file) and follow the examples provided. This will give you a solid understanding of how to apply the PMT formula in various situations.

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Calculating the total amount of a loan can be a bit tricky, but don't worry, it's easier than you think.

To see the total amount that will be repaid over the duration of the loan, you can use the formula =C6*C3 in cell C8.

This formula multiplies the interest rate by the loan amount, giving you the total amount that will be repaid.

For example, if the interest rate is 5% and the loan amount is $10,000, the total amount repaid would be $10,500.

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Calculating the original loan amount can be a bit tricky, but Excel makes it easy with a simple formula. You just need to select the cell where you want the result to appear, type in the formula =PV(C3/12, C5, C4, 0), and press Enter.

The formula requires a few specific inputs: the interest rate, the number of total payments, the monthly payment, and a value for the type of loan. In the example from the article, the interest rate is in cell C3, the number of total payments is in cell C5, and the monthly payment is in cell C4.

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To use the PV formula, you need to divide the interest rate by 12, which is why you see C3/12 in the formula. This step is crucial for calculating the original loan amount accurately.

Here's a breakdown of the PV formula:

To calculate periodic payments, you need to use the PMT function in Excel. This function requires several parameters, including the annual interest rate, the number of payments per year, and the total number of payments.

The annual interest rate should be divided by the number of payments per year, which is deemed to be equal to the number of compounding periods. For example, if the annual interest rate is 8% and the payment frequency is monthly, the rate would be 8%/12.

You can use a table to determine the correct rate and number of payments per year based on the payment frequency:

For instance, to find the amount of a periodic payment on a $5,000 loan with an 8% annual interest rate and a duration of 3 years, you would use the PMT function with the following arguments:

The PMT function will calculate the periodic payment based on the given parameters, and you can use this value to determine the loan amount based on the payment.

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In the example below, we have a dataset in range C3:C6 detailing key inputs for a loan calculation, including the interest rate, monthly payment, total number of periods, and the end period of the loan. We want to calculate the original loan amount based on these inputs using a formula.

The formula in cell C9 uses the PV (Present Value) function to determine the loan amount by factoring in the monthly interest rate, number of payments, and payment value.

Divide the annual interest rate (6.91%) by 12 to find the monthly interest rate. For example, dividing 6.91% by 12 gives 0.576%.

The second argument, C5, represents the total number of monthly payments (120). Since the loan term is 10 years, the number of months is 10*12 = 120.

Input the fixed monthly payment amount (-$115.64). The negative sign represents cash outflow from the borrower’s perspective.

If you want to calculate the monthly payment instead of the loan amount, use the formula: PMT(C3/12, C5, -10000)

The PV function calculates the present value of future payments, discounted at the monthly interest rate. In this formula, the present value represents the loan amount (principal).

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