CUMPRINC

The CUMPRINC function calculates the principal portion of a loan payment made during a specific period. It helps in analyzing the distribution of loan payments between principal and interest over the course of a loan term.

Syntax

=CUMPRINC(Rate, Nper, Pv, Start Period, End Period, Type)

Rate Interest rate for each period.
Nper Total number of payment periods in the loan.
Pv Present value or total amount of the loan.
Start Period The starting period for which you want to calculate the principal payment.
End Period The ending period for which you want to calculate the principal payment.
Type Indicates whether the payments are due at the beginning or end of the period. Use 0 for end of period or 1 for beginning of period.

About CUMPRINC

When you're demystifying loan payment dynamics, the CUMPRINC function in Excel comes to the rescue. It offers a straightforward method for disentangling the principal amounts within loan payments, shedding light on the distribution of borrowed funds repaid over successive periods. This function proves particularly handy in financial analyses to discern the principal repayment trajectory throughout a loan term, aiding in decision-making and financial planning strategies.

Examples

Let's say you have a loan with an annual interest rate of 6%, a total of 5 payment periods, a loan amount of $10,000, and payments due at the end of the period. You want to find the principal portion paid off in the 3rd payment. The CUMPRINC formula to use would be: =CUMPRINC(0.06, 5, 10000, 1, 3, 0) This will give you the principal repayment amount for the 3rd period.

Consider another scenario where you have a loan with a quarterly interest rate of 4%, 10 payment periods, a loan amount of $20,000, and payments due at the beginning of each period. You wish to determine the principal paid from the 5th to the 8th payment inclusive. Using CUMPRINC, the formula to employ is: =CUMPRINC(0.04, 10, 20000, 5, 8, 1) This calculation offers the total principal portion repaid from the 5th to the 8th payment periods.

Questions

How does the CUMPRINC function differ from the PPMT function in Excel?

While both CUMPRINC and PPMT are used for loan analysis, they serve different purposes. CUMPRINC calculates the principal portion of a loan payment for a specific period, focusing on the repayment of borrowed funds. On the other hand, PPMT computes the principal repayment for a single period within a loan term and is typically used in conjunction with the PMT function to dissect payment details further.

Can the CUMPRINC function handle loans with varying payment amounts each period?

No, the CUMPRINC function is designed for loans with constant payment sizes. If your loan requires varying payment amounts across periods, alternative methods or functions may need to be utilized for accurate loan analysis.

What does a negative result from the CUMPRINC function indicate?

A negative result from the CUMPRINC function signifies that the amount reflects repayment received rather than funds lent out. In the context of loan analysis, negative principal values suggest a reduction in the outstanding loan balance as payments are made towards the principal amount owed.

Related functions

PPMT
IPMT
PRICEMAT
PRICE