Loan Payments With PMT

When you borrow money, you usually pay it back in equal installments. The PMT function tells you exactly how big each of those payments must be.

You give PMT three core pieces of information: the interest rate per period, the number of payments, and the amount you borrowed (the present value). PMT does the math and returns one steady payment.

This is the engine behind every loan, mortgage, and car-finance calculator you have ever seen.

The full signature is =PMT(rate, nper, pv, [fv], [type]).

• rate — the interest rate for one period.
• nper — the total number of payments.
• pv — the present value, i.e. the loan amount.
• fv — optional ending balance, defaults to 0.
• type — optional, 0 for end-of-period payments, 1 for start.

Only the first three arguments are required for a normal loan.