PMT Excel Formula

What this does

PMT calculates the constant payment needed to repay a loan at a fixed rate over a fixed term. It is the single most-used financial function in spreadsheets and the entry point to every mortgage model. Two rules govern it. The rate and the period count must share a unit — an annual rate divided by 12 alongside a term in months. And the result is negative because it is money leaving you; entering the loan amount as negative, or wrapping the result in ABS, flips it for display. The optional fv argument covers loans with a balloon payment at the end. The same idea underpins a lot of everyday Excel work, so the few minutes spent getting it right here pay back across every sheet you build afterwards. Treat it as a pattern, not a one-off, and it stops being something you look up and starts being something you reach for. For “pmt excel formula”, the reliable version is a short checking loop, not just the first command that appears to work. Run it on a deliberately small range first, watch how the affected formula change, and only then apply the same setup to the full sheet. When a formula is involved, keep the inputs labelled beside it, reference cells instead of typing values, and apply number formatting only after the result checks out. That is what makes a calculation you can defend to a CFO or an auditor useful in real work: repeatable, auditable, and not dependent on memory or luck.

A worked example

200,000 borrowed at 5 % annual over 25 years: =PMT(5%/12, 25*12, 200000) returns about -1,169.18 a month. To see what a shorter term costs, change 25 to 15 and the payment rises to roughly -1,581 — while total interest falls by more than half. A car lease with a 5,000 residual: =PMT(4%/12, 36, 25000, -5000). PMT is the answer to "what will this cost me a month", which is the question every borrowing decision actually turns on. A practical tip before you scale it up: build it once on a small block of test data, confirm the number against the tool on this page, and only then point it at your real sheet. That one habit catches almost every mistake while it is still cheap to fix, long before a wrong figure reaches a report or a colleague.

In Google Sheets

Everything above works in Google Sheets too. Excel and Sheets share the formula syntax used here; only the surrounding menus are arranged differently. That portability is deliberate — learn it once and it follows you between the two tools and across Windows and Mac. Keep this page bookmarked for the next time the same question comes up. Better still, rebuild the example once in your own sheet — doing it yourself, with the tool above to check against, is what turns a copied formula into a technique you own. Here is the takeaway for “pmt excel formula”: copy the answer if you are busy, but if you have a spare few minutes, rebuild the example in Excel yourself with the tool above open beside it. That single pass — type it, run it, watch the result move when you change an input — is what turns a formula you found into a technique you trust. Keep your inputs labelled and referenced, never hard-coded, and the same sheet stays correct and auditable as it grows. Done that way, you will not need to look this up again, and you will be the person others ask.

Common mistakes

• Passing an annual rate with a monthly term — the most common error with this function, and it produces a wildly wrong payment.
• Expecting a positive number; the sign is the cash-flow convention, not a fault.
• Forgetting that PMT covers principal and interest only — tax, insurance and fees are not in it.

Frequently asked questions