Purchasing a car or a house is usually a pleasant experience for the buyer. However, most financial institutions require a deposit or down payment to be made towards the total purchase price.
In this week’s tip, we share how to calculate the deposit or down payment for a car. For instance, the cost of the car could be $15,000 to be repaid over four years at 3% per period. Furthermore, you may want to keep the monthly payment at $400 per month, but need to calculate the deposit. This is how it can be done.
Note: You are welcome to download the workbook to practice
Applies To: Microsoft® Excel® 2010 and 2013
1. We are going to use the following formula:
- PV: calculates the loan amount.
- The loan amount will be subtracted from the purchase price to get the deposit amount.
- Rate: is the interest rate per period. It will be divided by 4 if it is per quarter or 12 if it’s per annum.
- Nper: is the total number of payment periods in an investment, which will be 48(4*12).
- Pmt: is the payment made each period.
2. Place the cursor in cell C6 and enter the formula below.
3. This will give you $3,071.48 as the deposit.
By using this method you can calculate the deposit for a car or house using an easy formula.