# How To Create a Loan Calculator in Excel

Paying your monthly rate on your loan is something that you should never take for granted. Keeping tabs on it needs to be accurate, but uncomplicated to avoid mistakes. One of the best ways to keep track of your monthly rate is by utilizing a loan calculator. A loan calculator can be made in Microsoft Excel without paying a dime on other software.

Here are some steps on how to create your own finance calculator:

- Input the labels of your variables in separate cells. Make sure that they are placed in a format that makes all variables easy to access and easy to locate. Normally, you will have the basic labels like the loan amount, the annual interest rate, and the number of years to finish the payment. These labels should be placed on the first three cells below the form’s title on the right corner of the page. Fill in the blank cells next to the labels accordingly of their actual amounts.
- For the calculation of monthly payments, you will have to use the PMT function. So, on a vacant cell, write down the label. Then adjacent to that cell is the formula for calculating the monthly payment. Let’s say that the amount of the loan is located on cell B3, the actual interest rate is on cell B4 and the number years on cell B5. The formula should be written as =PMT(B4/12,B5*12,B3).
Let us break down the whole formula to understand it. PMT is the function while B4/12 gives you the monthly interest rate. It is very important to get the monthly interest rate because you will need it to calculate the amount of your monthly payment. B5*12 gives you the number of months you will be making payments. B3 is the loan amount. Once this formula is set, the calculation of your monthly payment will be set on auto.

- You might notice that the font color of the resulting amount of the formula is red and it is also a negative amount. Don’t be alarmed because it is only an indication that it is an amount that needs to come out of your pocket. If you want to change it, you can use the absolute function. So, the formula becomes =abs(PMT(B4/12,B5*12,B3).

Now, if you want to monitor your loan down to the last cent, a good option for you is to resort to downloads of refinance calculators in Excel format that are made by professionals. If you utilize one, you will have your whole statement of account including the balance after every payment and the monthly interest after every payment. There are also interest only calculators that can show you how your monthly payments affect the deadline of completion of your payments.

If it is very important for you to have confidence in every payment that you make on your loan, a loan calculator will provide you that. Payment calculators are very consistent and they will not scam you for any amount of money.