The PMT is a Financial function that calculates and returns the repayment amount of a loan based on constant payments and a constant interest rate. This formula is commonly used in amortization schedule Excel models. In this guide, we’re going to show you how to use the PMT Excel function and also go over some tips and error handling methods.


Supported versions

  • All Excel versions

PMT Function Excel Syntax

PMT(rate, nper, pv, [fv], [type])


Arguments

rate The interest rate for the loan.
nper The total number of payments for the loan.
pv The present value, or the total value of all loan payments today.
[fv] Optional. The future value, or a cash balance you want after the last payment is made. The default value is 0 (zero).
[type]

Optional. When payments are due.

0 = end of period. (Default)

1 = beginning of period.


Examples

Without future value and due date type

The PMT function has 3 required arguments: rate, nper and pv. With this, you can calculate the constant payment amount needed through the entire loan period. The function assumes that payments are made at the end of each period, and the loan is to be paid in full.

For example, the following formula calculates the payment amount for a loan of $100,000 over a 36 month period, with 5% annual interest.

=PMT(0.05/12,36,100000)

Please note that, 5% interest is divided by 12, because the interest is given as an annual rate and the payment periods are on a monthly basis.

With future value and due date type

You can specify a target cash balance for after the last payment is made, and whether payments are to be made at the beginning or the end of each period.

The following formula is the extended version of the first example. It calculates same amount for same period with same interest. The difference is that there will be $50,000 left after the last payment, and payments are made at the begining of each period.

=PMT(0.05/12,36,100000,50000,1)

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Tips

  • If pv is entered as a positive number, the calculated payment amount will be negative. This is because the money is “coming out of pocket”. If you’d like to show negative numbers instead, multiply everything with ‘-1’.
  • The loan payments returned by the function include the principal and interest, but of course does not include any taxes, reserve payments, fees etc. you might want to consider.
  • Rate and nper units must be consistent. If nper is given in months, subsequently an annual interest rate should be divided by 12.
  • Multiplying the payment value by nper returns the total amount paid.
  • Other related financial functions: