Problem: You are considering buying a car. You used the previous tip to calculate a loan payment, as shown in Fig. 326. You want to do some “what-if” scenarios in order to see various options of increasing or decreasing the term or price.
Strategy: Follow the same setup that you used for the previous tip, as shown in Fig. 327.
1) Enter Price, Term in Months, and Annual Percentage Rate in cells B2:B4. See Fig. 327.
2) Enter this formula in cell B6: =–PMT(B4/12,B3,B2). See Fig. 327.
3) Copy cells B2:B6 over for several columns. Plug in different numbers for the price and/or term, as shown in Fig. 328.
Summary: This is where Excel shines. After you have entered the formulas for one loan model, you can easily copy and create many more loan models.
Functions Discussed: =PMT()
Cross Reference: Calculate a Loan Payment
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