In this article, we will learn How to use the CUMPRINC function in Excel.
While working with loan amounts and related queries, we usually don't understand how to calculate the monthly, quarterly, semi-annual or annual principal amount. The lender uses formula based on your chosen terms and conditions. Excel lets you access that formula using the CUMPRINC function. Understand more about how to calculate principal paid between the start and end period
What is the CUMPRINC function in Excel?
CUMPRINC function in Excel returns the cumulative principal paid between two given periods. The function takes the rate, total period of loan and Loan amount as argument. Principal amount is The amount of money one borrows.
|=CUMPRINC (rate, nper, pv, start_period, end_period, type)|
rate – The interest rate per period.
nper – The total number of payments.
pv – the loan amount
start_period - start month for the period
end_period - end month for the period
type – The timing of the payment, either at the beginning or end of the period. Numbers 0 or 1 represent the payment date. The number 0 represents payment at the end of the period, and the number 1 represents payment at the beginning of the period.
All of the above might be confusing for some people, so let’s gear up & start learning its usage in excel with the example. Here we have a loan amount of Mr X. Mr X borrowed a 1 year (12 payments) loan on the following terms.
Mr X will pay the $2,47,000, the total amount including principal amount and Interest amount via paying monthly payment approx $21,000. Mr X wouldn't understand how much principal amount is paid over the first six months. Use the formula to calculate principal paid from 1st month to 6th month.
Use the formula :
D4 : rate/12, annual rate divided by 12 for monthly payments.
D5 : total number of payments
D3 : total loan amount
F3 : start period
G3 : end period
0 : payment at the end of period
As you can see, $ 1,00,313 is the principal amount paid in the first six months. You must be wondering why there the resulting amount is with a negative sign, As we the loan amount or borrowed amount is positive so the amount returned comes with a negative sign.
Now change the start period and end period argument in the formula. To calculate the amount varying with different intervals of time.
As you can see we get the different amount for different intervals of time period. Calculate the principal payment on cumulative loan using CUMPRINC function in Excel here.
Here are some observational notes shown below.
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Calculate the principal payment on cumulative loan using CUMPRINC function in Excel : cumulative principal paid based on Loan amount with constant interest rate given over a period of time calculated using CUMPRINC function in Excel.
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