Monday, August 31, 2009

Calculate Car Payments

Okay, let’s say it is time to trash the Nerdmobile and buy a new car. Well, no self-respecting geek is going into a car dealer without his or her trusty laptop or netbook loaded with the most recent version of Excel.

Why is that, you ask? To calculate the monthly car payments, of course! Here is how:

The Excel PMT() function can calculate the monthly repayment using the following format:

PMT(AnnualInterestRate/12, NumberOfPayments, AmountOfLoan)

For example, if your annual interest rate is 6%, on a 5-year (60 months) loan of \$30,000, your formula would look like this:

=-PMT(0.05%,60,30000)

Note that a negative sign (-) was placed in front of the function in order to return a positive value (negative payment values look messy…)

With your formula in place, hit Enter and, Presto, you have your monthly payment. If you don’t like the results, play around with the interest rate, the length of the loan, or maybe check out some cheaper cars. How cool!