payment calculation

[Guest]

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!

 

[Niek Otten]

=PMT(6.29%/12, 60, -25266)
returns the correct answer

 

[Niek Otten]

Paying per day is not the same as paying per month

 

[Ron Rosenfeld]

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