How To Calculate Interest Paid On Loan In Excel You can use the CUMIPMT function in Excel to calculate the total interest that will be paid on a loan This function uses the following syntax CUMIPMT rate nper pv start period end period type where rate The annual interest rate nper The total number of payment periods pv The present value i e starting value of the loan start period The first period in the calculation
Note In the formula B2 is the annual loan interest rate B2 12 will get the monthly rate B3 is the years of the loan B3 12 will get the total number of periods months during the loan B1 is the total amount of loan B4 is the first period you pay the bank while B5 is the last period you pay the bank Loan Amount 5 000 000 00 The loan amount It must be entered as a negative value Yearly Rate 10 10 interest rate should be paid annually Period per Year 12 There are 12 months in a year Period 1 To get the result for the first month the input is 1 This value is variable Total Period year 25 The number of years allowed to pay off the total loan amount
How To Calculate Interest Paid On Loan In Excel
How To Calculate Interest Paid On Loan In Excel
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Formula to Calculate an Interest Rate in Excel Maybe you have an existing loan and want to quickly see the annual interest rate you re paying As simple as calculating a payment with basic loan details you can do the same to determine the interest rate Get the loan term monthly payment and loan amount and enter them in your sheet Formula Breakdown The RATE function will return the monthly rate in percentage of Loan Payment C7 denotes the NPER as the total payment period in years which is 5 We have multiplied it by 12 for the monthly payment system C6 denotes the payment made in each period as PMT The Minus sign denotes the monthly payment as debit C5 denotes the Loan as present value PV
For example you can build a calculator to calculate the total interest paid on a loan based on the loan amount interest rate and period of payment In Excel there are 2 ways of doing this CUMIPMT function this returns the cumulative interest between a start and end period Syntax CUMIPMT rate nper pv start period end period type Doing so will calculate the amount that you ll have to pay in interest for each period This doesn t give you the compounded interest which generally gets lower as the amount you pay decreases You can see the compounded interest by subtracting a period s worth of payment from the principal and then recalculating cell B4
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You will pay 231 99 every month for 60 months in order to pay off a loan of 12 000 Remember this payment includes both the principal and the interest rate of the loan To calculate the total amount of interest paid over the 60 payments first multiply the monthly payment by the total number of payments or the nper In cell B9 type B8 B6 For this example we want to calculate cumulative interest over the full term of a 5 year loan of 5 000 with an interest rate of 4 5 To do this we set up CUMIPMT like this rate The interest rate per period We divide the value in C6 by 12 since 4 5 represents annual interest C6 12
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