How to Use PMT Function in Excel (Calculate Loan Easy)

Hello friends! Today I share with you PMT() formula in Excel along with easy example.

What is PMT? It stand for "Payment". If you want to buy car or house with bank loan, PMT help you calculate how much money you pay back to bank every month. Very easy!

🛠️ How to write PMT Function

To make PMT work, you need 3 things: interest rate, how many months to pay, and how much money you borrow.

Formula Syntax:

=PMT(rate, nper, pv)

• rate: Interest rate from bank (If yearly rate, you must divide by 12 for monthly).
• nper: Total number of month you will pay. (Example: 5 years = 60 months).
• pv: Present Value. How much money you borrow from bank right now.

📊 Short & Clear Example

You want to buy car. You borrow $10,000 from bank. Bank charge 6% interest per year. You will pay for 5 years (60 months).

Let's calculate monthly payment!

Formula for Monthly Payment:

=PMT(B2/12, B3*12, B1)

• Result: -$193.33
• Why divide and multiply by 12? Because you pay every month! So rate 6% / 12 is monthly rate. And 5 * 12 = 60 is total months.
• Why result is negative (-)? Because it is money go out from your pocket.

Check out my Advance Loan Calculator Tool to calculate loan payment easily!

💡 Easy Pro Tips

1. Make Result Positive: If you don't like minus sign (-), just put minus before PV in formula! Like this: =PMT(B2/12, B3*12, -B1). Now it show $193.33 positive.
2. Check your Time: Always remember to match rate and time. If you pay monthly, rate must be monthly (divide by 12) and time must be months (multiply by 12).
3. Save your Money: PMT help you check if bank charge you correct or not. Always use it before you sign contract!

📚 Useful Resources

• How to Calculate Simple Loan Monthly Payment in Excel (Video in Khmer)
• Top 15 Basic Excel Formulas for Beginners (Khmer Video)