You can use the Insert Function dialog box, which will prompt your for the arguments by name. You don't need to memorize the order of the function arguments. Note that in the table, the bold function arguments are required while those in italics are optional. Just as you have to supply at least three of the variables to solve a TVM problem in a financial calculator, you also have to supply at least three of the arguments to each Excel function. The table below shows the equivalency between the calculator keys and Excel functions: Purpose Analogy to Calculator Financial KeysĪll financial calculators have five financial keys, and Excel's basic time value functions are exactly analogous. If you have any questions or comments, please feel free to contact me. I will keep the examples rather elementary, but if you already understand the basics of using Excel, this tutorial will help you to understand the financial functions.Īn Excel spreadsheet can be downloaded that contains each of the examples shown in this tutorial.įor more advanced Excel functionality, please see my Excel pages and/or my Excel Blog. This tutorial will demonstrate how to use Excel's financial functions to handle basic time value of money problems using the same examples as in the calculator tutorials. There is more of a learning curve than a regular financial calculator, but it is much more powerful. More money will be applied to the principal balance each time you pay, and in doing this you not only reduce the amount of Interest that will be charged on each proceeding payment, but you also reduce the number of periods that you will be charged interest for over the entire course of payment.Are you a student? Did you know that Amazon is offering 6 months of Amazon Prime - free two-day shipping, free movies, and other benefits - to students? Click here to learn moreĮxcel (and other spreadsheet programs) is the greatest financial calculator ever made. This is also why increasing your monthly payment will significantly reduce the amount of interest that you pay in the long run. This is why a lower payment actually benefits the lender more than you… because with a lower payment, less is paid towards your principal balance each month, and therefore you will have to pay more months of charged interest in the long run. This means that only what is left over after paying interest, is applied to your principal balance. With a fixed rate loan, you will have a certain amount of interest that you must pay each month, based on your current principal balance and your interest rate. How to decrease payoff time and interest paid for loans Get your copy of the loan payoff calculator template Then you will be able to see how this information changes as you enter different values into the sheet. So you will be able to see how long it will take to payoff your loan, how much interest you can expect to pay, and the total amount of money that you should expect to pay with interest included. There are also totals that will calculate at the top of the sheet, on columns that have dollar amounts. (See the bottom of this page for definitions of varying loan terminology)Īfter entering your principal balance, the interest rate, and the actual payment amount, the following information will calculate and display on the right side of the template: The “Actual Payment” is what you should adjust to see your payoff information. Note that the minimum monthly payment does not affect the calculations in this template. There is also a place for you to name the loan, as well as a place to enter your minimum monthly payment. The following values are the most important to fill in the template, as they directly affect the payoff calculations: This loan payoff template will allow you to track and calculate the months/years until payoff for multiple loans, whether you are wanting to track your student loans, your mortgage, or any other fixed rate loan.īelow is a general explanation on how the loan payoff calculator template works, and then after that I will give you specific instructions on how to use the template.
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