## Introduction: What Is a PMT Function?

A PMT function is used when you want to know how much your monthly payment would be on a loan based on an interest rate and a constant payment schedule. In the following example, you are looking at purchasing a car and will need to borrow $20,000. The bank will give you a loan at 6.8% interest and you will have to pay back the loan in 3 years.

## Step 1: How to Calculate a Payment Using Excel PMT Function

The first step calculating your payment using Excel's PMT function is to enter the following:

In the cell you want your formula to appear:

1. Type the equal sign

2. Type PMT

3.

## Step 2: NPER

The next step is to enter the number of payments for the life of the loan. If you have a three year loan and you are making monthly payments, then you will have 36 (12 months multiplied by the number of years) NPER.

## Step 3: PV

The last step in the PMT function is to enter the PV. PV stands for present value and represents the amount of money that you are borrowing. For example: If you are borrowing $20,000, the PV would be 20000. Take note that you do not include commas in Function Arguments.

## Discussions

why aren't we supposed to add commas in the PMT function?