What is the PMT Function
The PMT function calculates the fixed periodic payment amount for a loan or annuity based on a constant interest rate and a fixed number of periods. It is one of the most used financial functions.
Formula: =PMT(rate, nper, pv, [fv], [type])
Practical Example 1
Loan of 500000 at 10 percent annual for 60 months.
Type: =PMT(10 percent divided by 12, 60, -500000)
Result: the monthly installment amount
Practical Example 2
Show the payment as a positive number.
Type: =ABS(PMT(10 percent divided by 12, 60, -500000))
Result: the positive installment amount
Practical Example 3
Calculate total interest paid over the loan.
Type: =PMT(10 percent divided by 12, 60, -500000) * 60 - 500000
Result: the total interest
Practical Example 4
Calculate a car loan payment.
Type: =PMT(8 percent divided by 12, 48, -1500000)
Result: the monthly car loan payment
When to Use It
PMT is used for EMI calculations, for mortgage payments, for car loan calculations, for lease payments, for business loan planning, and for any financial scenario where you need the fixed periodic payment.