Calculating the car loan cost by using an ordinary calculator can be difficult and time consuming. In addition to this, you might obtain an in accurate result due to unavoidable error. However, you can calculate the cost of a car loan by using Microsoft Excel. The use of Microsoft Excel can make the calculation easier. Besides this, it reduces the risk of mathematical error. In case you would calculate the loan cost using Excel, make sure to use the PMT function and the steps below.
1. When you use Microsoft Excel in calculating, make sure everything properly. Place the interest rate on cell A1 and label it as Interest Rate. The Months of Repayments should be placed on cell B1 and labelled as such. Use cell C1 for the amount borrowed and label it as Loan Amount.
2. Key in “=Interest Rate/12” in cell A2 and replace the Interest Rate with the yearly interest rate. For example, if your car loan has an interest of 5 percent, key in “=0.06/12”.
3. In order to calculate the number of months for repayments, use cell B2 and key in “=Years of Repayment*12”. After doing this, change the Years of Repayment into the number years of the loan. For example, a loan with a five-year term should look like “=5*12”
4. Type the amount borrowed in cell C2. In case you loaned $20,000 type $20,000 loan in cell C2.
5. Key in”=PMT(A2,B2,-C2)” in cell D2 to calculate the monthly payments of your car loan.
As soon as you know how to use Microsoft Excel in calculating the cost of the car loan, you would be able to determine the monthly payments that you would be paying each month. Through this, you can prepare the needed budget so as to avoid delayed payments.