# payment calculation

1. ## payment calculation

Hi all, I am noticing a significant difference between how Excel calculates
a payment and how regular financial software calculates it. Take an
example:-

Term: 60 months
Amount: \$25,266
Rate: 6.29% pa

Payment Function: PMT(6.29/360, 60*30, -25266) returns \$441.

My financial software gives me \$491. That is \$50 difference! Why? The
software I am using is Auto loan calculation software and I know it is
right, because it is used by banks.

TIA!

2. ## Re: payment calculation

=PMT(6.29%/12, 60, -25266)
--
Kind regards,

Niek Otten

<param@community.nospam> wrote in message
news:eDdzPD56FHA.472@TK2MSFTNGP15.phx.gbl...
> Hi all, I am noticing a significant difference between how Excel
> calculates a payment and how regular financial software calculates it.
> Take an example:-
>
> Term: 60 months
> Amount: \$25,266
> Rate: 6.29% pa
>
> Payment Function: PMT(6.29/360, 60*30, -25266) returns \$441.
>
> My financial software gives me \$491. That is \$50 difference! Why? The
> software I am using is Auto loan calculation software and I know it is
> right, because it is used by banks.
>
> TIA!
>

3. ## Re: payment calculation

Paying per day is not the same as paying per month

--
Kind regards,

Niek Otten

"Niek Otten" <nicolaus@xs4all.nl> wrote in message
news:%23wYH\$R56FHA.252@TK2MSFTNGP15.phx.gbl...
> =PMT(6.29%/12, 60, -25266)
> --
> Kind regards,
>
> Niek Otten
>
> <param@community.nospam> wrote in message
> news:eDdzPD56FHA.472@TK2MSFTNGP15.phx.gbl...
>> Hi all, I am noticing a significant difference between how Excel
>> calculates a payment and how regular financial software calculates it.
>> Take an example:-
>>
>> Term: 60 months
>> Amount: \$25,266
>> Rate: 6.29% pa
>>
>> Payment Function: PMT(6.29/360, 60*30, -25266) returns \$441.
>>
>> My financial software gives me \$491. That is \$50 difference! Why? The
>> software I am using is Auto loan calculation software and I know it is
>> right, because it is used by banks.
>>
>> TIA!
>>

>
>

4. ## Re: payment calculation

On Thu, 17 Nov 2005 10:06:02 -0600, <param@community.nospam> wrote:

>Hi all, I am noticing a significant difference between how Excel calculates
>a payment and how regular financial software calculates it. Take an
>example:-
>
>Term: 60 months
>Amount: \$25,266
>Rate: 6.29% pa
>
>Payment Function: PMT(6.29/360, 60*30, -25266) returns \$441.
>
>My financial software gives me \$491. That is \$50 difference! Why?

GIGO

>The software I am using is Auto loan calculation software and I know it is
>right, because it is used by banks.
>
>TIA!
>

Given the correct inputs, Excel gives me \$491.88.

You've applied incorrectly multipliers/divisors for the rate and the number of
periods.

If your payments are monthly, you should be dividing the annual rate by 12
(since there are 12 months in a year) and I don't know why you are multiplying
the number of months by 30.

So your formula should be: =PMT(6.29/1200, 60, -25266)

or =PMT(6.29%/12,60, -25266)

--ron

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