How to Calculate Car Payment in Excel (with Easy Steps)

If you are looking for ways to calculate car payment in Excel, then this article will serve this purpose. Whenever someone buys a car, most likely the payment is repaid in multiple installments. In Excel, we can calculate car payment quite easily by following some simple steps. So let’s start with the article and learn all these steps to calculate car payment in Excel.

How to Calculate Car Payment in Excel: with Easy Steps

In this portion of the article, we will discuss 6 easy steps to calculate car payment in Excel. In the following dataset, we have some Car Payment Parameters. Here, the Cost of Car is $30,000, the initial Down Payment is $6,000, the Interest rate is 7%, and the loan should be repaid in 5 years.

We have used Microsoft Excel 365 version for this article, you can use any other version according to your convenience.

Step-01: Computing Total Payable Interest to Calculate Car Payment in Excel

First, we need to calculate the Total Interest that needs to be paid in the span of 5 years. Here, we are also going to compute the Monthly Payment by using the PMT function. Let’s follow the steps mentioned below.

Firstly, enter the following formula in cell C10 to calculate the Amount Financed.

=C4-C5

Here, cell C4 represents the Cost of Car, and cell C5 refers to the cell Down Payment.

After that, press ENTER.

As a result, you will see the Amount Financed as shown in the following image.

Following that, enter the formula given below in cell C11.

=PMT(C6/12, C7*12,-C10)

Here, cell C6 represents the Interest Rate, cell C7 indicates the cell of Year, and cell C10 represents the Amount Financed.

Formula Breakdown

=PMT(C6/12, C7*12,-C10) → It returns the monthly payment that needs to be paid each month over a loan period.
- C6 → rate argument.
- C7 → nper argument
- C10 → pv argument

- - Output → $475

Following that, press ENTER.

Note: Here, we have used a negative sign before the pv argument. As these amounts are payments, this generates a negative cash flow. For this reason, a negative sign is used here.

Consequently, you will see the following output on your worksheet as marked in the image given below.

Now, insert the following formula in cell C12.

=C11*C7*12-C10

Next, hit ENTER.

Subsequently, you will have the Total Interest as shown in the following picture.

Step-02: Calculation of Starting Balance

In this section, we will compute the Starting Balance for each month. To do this, we will use the steps given below.

Firstly, enter 0 and 1 under the Month column.

After that, click the Fill handle and drag it down as demonstrated in the following image.

Drag the Fill Handle until the tooltip says 60.

Note: As we are calculating the payments for 5 years, we need to create the table for 60 Months.

Consequently, you will see the following image on your screen.

Now, enter the following formula in cell F15.

=C10

After that, press ENTER.

As a result, you will get the following output as marked in the following image.

Following that, enter the formula given below in cell C16.

=F15

Afterward, hit ENTER.

Subsequently, you will obtain the Starting Balance for Month 1 as demonstrated in the following picture.

Step-03: Determining Monthly Interest to Calculate Car Payment in Excel

Now, we will determine the Monthly Interest against the Starting Balance of each month. Let’s use the steps mentioned below to do this.

Firstly, enter the following formula in cell D16.

=C16*$C$6/12

Here, cell C16 refers to the Starting Balance of Month 1, and $C$6 represents the Interest Rate.

Subsequently, press ENTER.

Note: Here, we have used absolute cell reference for cell C6 ($C$6). As we are repaying the loan amount monthly, we have divided the Interest Rate by 12.

Consequently, you will get the amount of Monthly Interest as shown in the below-given picture.

Step-04: Calculating Monthly Payment

In this portion of the article, we will calculate the Monthly Payment that needs to be paid. To do this, we will use the IF function. Let’s follow the procedures mentioned below.

Firstly, enter the formula given below in cell E16.

=IF((C16+D16)>$C$11,$C$11, C16+D16)

Here, cell $C$11 refers to the previously calculated Monthly Payment, and cell D16 represents the cell of Interest.

After that, press ENTER.

As a result, you will get the Payment amount as marked in the following image.

Step-05: Computation of Ending Balance to Calculate Car Payment in Excel

Now, we will compute the Ending Balance after each month. Ending balance is simply the subtraction of Payment from the summation of Starting Balance and the Interest. Now, let’s follow the procedure demonstrated below.

Firstly, use the following formula in cell F16.

=C16+D16-E16

Here, cell E16 represents the Payment for each month.

Afterward, press ENTER.

Consequently, you will get the following output as shown in the following image.

Step-06: Constructing Monthly Payment Chart to Calculate Car Payment in Excel

In the final step, we will construct the Monthly Payment Chart. This will help us to visualize how much money we will be paying each month. To do this, let’s use the steps given below.

Firstly, select the cells C16:F16 as shown in the following image.

Now, by using the AutoFill feature of Excel, we will get the remaining outputs.

Note: As our Monthly Payment Chart extends up to the 75th row, it is demonstrated in 3 separate images. You will also notice that at the end of the 60th Month, the Ending Balance becomes $0.

Practice Section

In the Excel workbook, we have provided a Practice Section on the right side of the final worksheet. Please practice it by yourself.

Download Practice Workbook

Calculate Car Payment.xlsx

Conclusion

Finally, we have to the end of the article. I sincerely hope this article could guide you to calculate car payment in Excel. Please feel free to leave a comment if you have any queries or recommendations for improving the article’s quality. Happy learning!

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