Formulas explained

Let’s face it, financial calculations can be complicated. However, with the power of Google Sheets and its formulas, you can now make your financial calculations a breeze, even if you are not a math whiz. One such formula is the CUMIPMT formula. In this article, I’ll be explaining what the CUMIPMT formula is and how you can use it to your advantage.

The CUMIPMT formula, one of Google Sheets’ financial formulas, helps you calculate the cumulative interest paid on a loan/commercial asset over a certain period of time. By using this formula, you can determine how much of your monthly payment is dedicated to interest payments, and if you’re like me, you can celebrate as the interest payments go down over time.

The CUMIPMT formula function in Google Sheets is a bit different from other Google Sheets formulas, so let’s take a look at the formula and how to use it.

A simple CUMIPMT formula looks like this:

=CUMIPMT(rate, nper, pv, start_period, end_period, type)

Before we get started on how to use this formula, let’s make sure we’re all on the same page with the terminology:

- Rate: The interest rate per period.
- Nper: The total number of payment periods in the loan or lease.
- PV: The present value or principal of the loan or lease.
- Start_period: The starting period in which you want to calculate interest.
- End_period: The last period in which you want to calculate interest.
- Type: When payments are made with respect to the beginning or end of the period. Enter “0” for end of period payments and “1” for beginning of period payments.

Now, let’s put the pieces of the formula together:

**=CUMIPMT(***rate*, *nper*, *pv*, *start_period*, *end_period*, *type***)**

As with any other formula in Google Sheets, you need to enter the relevant data for each variable, depending on your loan or lease.

Here’s an example to give you an idea:

=CUMIPMT(5%/12, 12*5, 50000, 1, 12, 0)

In this example, the interest rate per period is 5%, Nper is 12*5 (12 months a year multiplied by 5 years), which gives 60 total payment periods. PV is 50000, Start_period is 1, and End_period is 12, with payments made at the end of each period.

Once you’ve entered your formula, press enter and voila, the total interest paid over the period will be displayed.

Sure, there are calculators and apps that can help you calculate your loan and lease payments, but they can be limited and week-to-week, you might need to make new payments manually. Plus, calculating interest payments manually allows you to truly understand the financial impact of a loan or lease and make informed decisions on future investments.

With the CUMIPMT formula in Google Sheets, it’s easy to calculate the interest paid every payment period and find out the total interest paid over a certain period of time, something that can be hard to calculate manually. Plus, it’s completely customizable to your unique loan or lease, making it more accurate for more complex investments.

As a passionate marketer, I’m always looking for ways to make life easier for myself and my team. The CUMIPMT formula in Google Sheets does just that by making financial calculations less daunting and more manageable, so you can focus on the things that matter, like growing your business.

If you’re looking for more ways to streamline your work and get more tasks done in less time, check out Google Sheets for more formulas, templates, and other tools to simplify your life. Happy calculating!