Tuesday, July 7, 2015

Buying a Tesla

I am sure there are many of us who would like to own one of the new status-symbol-laden Tesla automobiles (I know I would!).  Although they do not have a built-in Excel application, the all-electric, futuristic Teslas come with a host of high-tech features.

So, how do you know if this is a car you can afford?  Well, if you have your tablet or a laptop along with you while you are shopping, you can calculate the Monthly Payments using a handy-dandy Excel function.

The PMT() Function - Here is How it works:

Coming up with this information in Excel could hardly be easier.  The PMT() function can calculate the monthly repayment using the following syntax.  Note that a minus sign has been put in front of the PMT function so that it returns a positive payment amount (which is more intuitive for most folks…), and since we are looking for Monthly Payments, the first argument is divided by 12.  The rest is a piece of cake:

-PMT(AnnualInterestRate/12, NumberOfPayments, AmountOfLoan)

To illustrate this, let’s say you traded in your Jaguar (we might as well dream…), and your bottom-line amount of your loan is going to be $51,000.  If your annual interest rate is 3.5%, and you are financing for 60 months, the resulting formula would look like the following:

=-PMT(3.5%/12, 60, $51,000)

Having constructed your formula with very little effort, you hit Enter and, Bamm, you have your monthly payment (In this case, $927.78).   

Too much money?  Don’t have a Jag to trade in?  If you don’t like the results, play around with the interest rate, the length of the loan, or maybe you’d want to check out a Chevy Volt.  The bottom line is that it is all so simple when you use Excel.  Coolness…

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