# A to Z of Excel Functions: the ISPMT Function

26 July 2021

*Welcome back to our regular A to Z of Excel Functions blog. **Today we look at the ISPMT function.*

**The ISPMT function**

This function calculates the interest paid (or received) for the specified period of a loan (or an investment) for a constant instant rate with equal principal repayments. In reality, this is quite an easy financial instrument to calculate using basic formulae, but the **ISPMT** function makes it slightly simpler than computing from first principles.

The **ISPMT **function employs the following syntax to operate:

**ISPMT(rate, per, nper, pv)**

The **ISPMT** function has the following arguments:

**rate:**this is required and represents the constant interest rate for the loan or investment**per:**this is required, and specified the period to be considered, between periods 1 and**nper****nper:**this is also required and denotes the total number of payments for the loan or investment**pv:**also necessary, this is the present value, or the total amount that a series of future payments is worth now, also known as the principal (*i.e.*what you are borrowing).

It should be further noted that:

- the payment returned by
**PPMT**relates to the principal but considers no taxes, reserve payments or other fees sometimes associated with loans - make sure that you are consistent about the units you use for specifying
**rate**and**nper**. If you make monthly payments on a four-year loan at an annual interest rate of 12%, use 12%/12 for**rate**and 4*12 for**nper**. If you make annual payments on the same loan, use 12% for the**rate**and 4 for**nper** **ISPMT**counts each period beginning with zero (0), not with one (1)- most loans use a repayment schedule with even periodic payments. The
**IPMT**function returns the interest payment for a given period for this type of loan - some loans use a repayment schedule with even principal payments. The
**ISPMT**function returns the interest payment for a given period for this type of loan - this is one of Excel’s financial functions which distinguishes between cash inflows (positive) and outflows (negative).

Please see my example below:

*We’ll continue our A to Z of Excel Functions soon. Keep checking back – there’s a new blog post every other business day.*

*A full page of the function articles can be found **here**.*