We can easily calculate the car loan amortization by using the **Microsoft Excel** financial formulas. This is an easy task. While purchasing a car, sometimes we need to pay the payment of the car by some **installment**. We can easily pay the car loan amortization by applying **Excel **formula. This will save you a lot of time and energy. Today, in this article, weâ€™ll learn **four **quick and suitable steps to calculate the** car loan amortization** in **Excel **effectively with appropriate illustrations.

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## Introduction to the Loan Amortization

An **amortizing loan** is a loan where the **principal **is **paid down throughout** the life of the loan according to an amortization plan, often by equal payments, in banking and finance. An amortizing bond, on the other hand, is one that repays a portion of the principal as well as the coupon payments. Letâ€™s say, the total value of the car is **$200000.00**, the annual interest rate is **10%**, and you will pay the loan within **1 **year.

## 4 Effective Steps to Use Formula for Car Loan Amortization in Excel

Letâ€™s assume we have an **Excel **large worksheet that contains the information about the car loan amortization. From our dataset, we will calculate the car loan amortization by using the **PMT**, **IPMT**, and **PPMT** financial formulas in Excel. **PMT **stands for **Payment**, **IPMT **is used to get the **interest of payment**, and **PPMT **is used to get the **principal payment**. We will apply these financial functions to calculate the car loan amortization. Hereâ€™s an overview of the car loan amortization in the **Excel **dataset for todayâ€™s task.

We will do those **four **easy and quick steps, which are also time-saving. Letâ€™s follow the instructions below to learn!

### Step 1: Use the PMT Function to Calculate Principal of Car Loan Amortization in Excel

First of all, we will calculate the payment by using the PMT financial function. One can pay oneâ€™s payment every week, month, or year by using this function. The syntax of the function is,

**=PMT(rate, nper, pv, [fv],[type])**

Where **rate **is the interest rate of the loan, **nper **is the total number of payments per loan, **pv **is the present value i.e. the total value of all the loan payments at present, **[fv]** is future value i.e. the cash balance one wants to have after the last payment is done, and **[type]** specifies when the payment is due.

Letâ€™s follow the instructions below to calculate payment by using the **PMT** function.

- First, select cell
**C11**and write down the PMT function in that cell. The PMT function is,

`=PMT(E$4/E$6,E$5*E$6,E$7)`

- Where
**E$4**is the**Annual Interest Rate**,**E$6**is the**number of payments per year**,**E$5**is the**number of years**,**E$7**is the**original price of the car**. We use the**dollar ($) sign**for the absolute reference of a cell.

- Hence, simply press
**ENTER**on your keyboard, and you will get the payment**($17,583.18)**as the output of the PMT function.

- Now,
**autoFill**the PMT function to the rest of the cells in column**C**.

- After completing the above process, you will be able to calculate the payment of the loan per month which has been given in the below screenshot.

### Step 2: Apply the IPMT Function to Calculate Interest of Car Loan Amortization in Excel

After calculating the payment, now, we will calculate the interest of payment by applying the **IPMT** function. The syntax of the function is,

**=IPMT(rate, per, nper, pv, [fv],[type])**

Where **rate **is the interest rate per period, **per **is a specific period; must be between 1 and nper, **nper **is the total number of payment periods in a year, **pv **is the current value of a loan or investment, **[fv]**is the nper payments future worth, **[type]** is the payments behavior.

Letâ€™s follow the instructions below to calculate the interest of payment by using the **IPMT **function.

- First of all, select cell
**D11**and type the IPMT function in the**Formula Bar**. The IPMT function in the**Formula Bar**is,

`=IPMT(E$4/E$6,B11,E$5*E$6,E$7)`

- Where
**E$4**is the**Annual Interest Rate**,**E$6**is the**number of payments per year**,**B11**is the**number of month**,**E$5**is the**number of years**,**E$7**is the**original price**of the car. We use the**dollar ($) sign**for the absolute reference of a cell.

- Further, simply press
**ENTER**on your keyboard, and you will get the interest of payment**($1666.67)**as the output of the IPMT function.

- Hence,
**autoFill**the IPMT function to the rest of the cells in column**D**.

- After completing the above process, you will be able to calculate the
**interest of payment**of the car loan amortization per month which has been given in the below screenshot.

### Step 3: Insert the PPMT Function to Calculate Interest of Car Loan Amortization in Excel

In this step, we will calculate the principal of payment by using the **PPMT** function. This is the easiest financial function. The syntax of the function is,

**=IPMT(rate, per, nper, pv, [fv],[type])**

Where **rate **is the interest rate per period, **per **is a specific period; must be between 1 and nper, **nper **is the total number of payment periods in a year, **pv **is the current value of a loan or investment, **[fv]**is the nper payments future worth, **[type]** is the payments behavior.

Letâ€™s follow the instructions below to calculate the principal of payment by using the PPMTÂ function.

- First of all, select cell
**E11**and type the PPMT function in the**Formula Bar**. The PPMT function in the**Formula Bar**is,

`=PPMT(E$4/E$6,B11,E$5*E$6,E$7)`

- Where
**E$4**is the**Annual Interest Rate**,**E$6**is the number of**payments per year**. **B11**is the number of**month**.**E$5**is the number of**years**,**E$7**is the**original price**of the car.- We use the
**dollar ($) sign**for the absolute reference of a cell.

- After that, press
**ENTER**on your keyboard, and you will get the interest of payment**($15916.51)**as the output of the PPMT function.

- Further,
**autoFill**the**PPMT**function to the rest of the cells in column**E**.

- While performing the above process, you will be able to calculate the
**principal payment**of the car loan amortization per month which has been given in the below screenshot.

### Step 4: Use Formula for Car Loan Amortization in Excel

This is the final step to calculate the car loan amortization in **Excel**. After calculating the payment per month, interest of payment per month, and the principal payment per month, now, we will calculate the balance of the loan by using those values. Letâ€™s follow the instructions below to calculate the balance by using the **mathematical **function.

- First of all, select cell
**F11**to apply the mathematical summation formula.

- After selecting cell
**F11,**write down the following formula in the**Formula Bar**. The formula is,

`=F10+E11`

- Where
**F10**is the initial price of the car, and**E11**is the total payment after the**first month**.

- After that, press
**ENTER**on your keyboard, and you will get the balance after the first month. The balance becomes**$184,083.49**after the**first month**.

- While performing the above process, you will be able to calculate the
**car loan amortization**per month. After the 12th month, you will be able to pay the total loan which has been given in the below screenshot.

## Things to Remember

đź‘‰** #DIV/0 **error occurs when the **denominator **is **0 **or the reference of the cell is not **valid**.

đź‘‰ The **#NUM!** error occurs when the **per** argument is less than 0 or is greater than the **nper** argument value.

## Conclusion

I hope all of the suitable steps mentioned above to **use a formula for car loan amortization** will now provoke you to apply them in your **Excel **spreadsheets with more productivity. You are most welcome to feel free to comment if you have any questions or queries.

## Further Readings

**Interest Only Mortgage Calculator with Excel Formula (A Detailed Analysis)****How to Use Formula for Mortgage Principal and Interest in Excel****Loan Amortization Schedule with Variable Interest Rate in Excel****Excel Interest Only Amortization Schedule with Balloon Payment Calculator****How to Use Formula for 30 Year Fixed Mortgage in Excel (3 Methods)****Mortgage Repayment Calculator with Offset Account and Extra Payments in Excel****Creation of a Mortgage Calculator with Taxes and Insurance in Excel****Mortgage Calculations with Excel Formula (5 Examples)**