Calculate a Monthly Loan Payment with PMT

Excel & Google Sheets

How it works

PMT takes the rate per period, the number of payments, and the loan amount, and returns the fixed payment that pays it off. Two rules do all the work: the rate and the term must share the same time unit — a 6% annual rate becomes 6%/12 per month, and five years becomes 60 monthly payments — and the loan amount goes in negative. That's the cash-flow sign convention: −25,000 is money paid out to you by the lender, so the payment comes back positive. Here that's $483.32 a month; multiply by 60 and subtract the principal and the loan costs $3,999.20 in interest. PMT works identically in every Excel version and in Google Sheets.

6%/12

The rate per payment period — the annual rate divided by 12 for monthly payments, never the annual rate raw.

60

The total number of payments: 5 years × 12 months.

-25000

The loan amount, entered negative because it's cash you receive. That makes the payment show positive.

When to use it

Use it for equipment and vehicle loans, mortgage estimates, comparing lender offers side by side, or checking a quoted payment before signing. Payment × periods − principal gives the true interest cost.

Common mistakes

• ✕Using the annual rate with monthly payments.

  ✓=PMT(6%,60,-25000) charges 6% per month and returns about $1,547 — roughly triple the real payment. Divide the annual rate by 12: 6%/12.

• ✕The payment shows negative.

  ✓You entered the loan amount positive: =PMT(6%/12,60,25000) gives −483.32. Enter it as −25000, or wrap the whole formula in a minus.

• ✕Term in years with a monthly rate.

  ✓=PMT(6%/12,5,-25000) computes just five payments at a monthly rate. Match the units: 5 years of monthly payments is 60.