Microsoft KB Archive/96437

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XL: Finding the Balance of a Loan for a Given Period

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The information in this article applies to:


 * Microsoft Excel 97 for Windows
 * Microsoft Excel for Windows 95, versions 7.0, 7.0a
 * Microsoft Excel for Windows, versions 2.x, 3.0, 4.0, 4.0a, 5.0, 5.0c
 * Microsoft Excel 98 Macintosh Edition
 * Microsoft Excel for the Macintosh, versions 2.x, 3.0, 4.0, 5.0, 5.0a
 * Microsoft Excel for OS/2, versions 2.2, 2.21, 3.0

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SUMMARY
To calculate the balance of a loan for any period during the life of the loan, use the IPMT function to calculate the interest payment for the next period and divide it by the interest rate of the loan.

MORE INFORMATION
For example, to find the balance of a $65,000 loan after 36 payments (3 years), when the rate of the loan is 9.5 percent per year, and payments are made monthly over a period of 30 years, calculate the IPMT of the loan for the next payment period and divide it by the computed interest rate, as in the following example:

  =IPMT(9.5%/12,37,30*12,-65000,,0)/(9.5%/12)

Note that 9.5%/12 is the interest rate per period, 37 is the period for which you want to know your balance, 30*12 is total number of payment periods, and -65,000 is the present balance of the loan.

This formula returns the value of $63,674.26.

In the function above, 12 refers to the number of payments in a year. For a loan that is compounded yearly, you would calculate the loan balance at the end of the third year with the following formula:

  =IPMT(9.5%,4,30,-65000,,0)/9.5%

This formula returns a value of $63,569.61. In this example, there is no need to divide the rate, and multiply the years by 12, because the number of payments per year is 1.