Loan repayment refers to paying the amount of money you have borrowed with interest. Sometimes people are confused about how much they should pay each month and how it associates with the amount they have borrowed as well as the length of the loan.

Excel can be a powerful tool for calculating loan repayments. You can use Excel to see how much your monthly payment is regarding the interest rate and loan schedule.

Here are the steps for loan repayment calculation in Excel. If you would like to find out the monthly payment of your mortgage, you need to make sure the future value of the amount of money you have borrowed has been set to default which is equal to 0. The formula for calculating monthly payment is shown as follow:

=-PMT(rate;length;present_value;[future_value];[type])

Remember, you need to know the annual interest rate, loan duration, and the present value of your loan to do the calculation. In some cases when people may have known the maximum monthly payment, they may want to know the corresponding interest rate. To calculate the interest rate, you can use the following formula:

=RATE(Nper;pmt;present_value;[future_value];[type])

If you have known the interest rate with a monthly payment you are able to afford and would like to find out the length of borrowing for a certain amount, you can use this formula:

=NPER(rate;pmt;present_value;[future_value];[type])

Since you are paying back the principal you have borrowed plus interest, you may want to see the breakdown of your monthly repayment over a certain time period. To find out the breakdown of your loan, you can use the following formula:

=-PPMT(rate;num_period;length;principal;[residual];[term])

To conclude, Excel is a strong tool when calculating loan repayment, you can try it yourself if you are considering applying for a loan.