ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to calculate XIRR using Microsoft Excel to know how much your loan costs

Updated on April 18, 2013

To be honest I don’t suggest buying a car through a loan for many reasons, so I am going today to explain just one reason, & I think it will be enough for you to think again before buying a car using facilities.

At least when you decide to do that, you should know what you actually pay.


If you want to buy a $10000 car, and you don’t have cash, you will start to look for a financial facility.

Finally, you find the chance for a loan charging you just 8% yearly. The employee will tell you the following:

1- We just charge 8% yearly, so $10000*8% = $800 suppose you will pay in full within two years so $800*2= $1600.

2- As is a loan you just have to pay $500 as other fees as it is not cash sales, & he will start give you a list of reasons.

3- So you have to pay just $1600+$500= $2100 more during two years.

4- First payment should just 10% of the cash cost $10000*10%= $1000

5- Monthly installment will be just $442.

6- Initial payment will be (10% the cost + other fees+ one installment) =($1000+$500+$442) = $1942. (Just 19.42% of the cash cost).

7- Look how much you are lucky, now you have a car loan costs you just 8%.

Q: Are you happy?

A: As accountant, I am not happy at all, because easily I will take his offer and go to my office, I will open Microsoft office Excel & use a very simple function (XIRR) to find that this loan will cost me 27.24% a year.


Why the rate has been changed from 8% to 27.24%?!!

1- Because when you received the car you directly paid 10% of cash value of the car, so the loan amount is $9000 and not $10000.

2- You paid $500 more as other fees.

3- You started to pay first payment on the same day you received the car.

4- You are paying monthly installment, so the loan amount is reducing month by month (You are not taking the car & pay the loan and its interest after 2 years in bulk).

Microsoft Excel Books

Excel Sheet

I prepared.
I prepared.

How do I use XIRR formula in MS Excel ?

Suppose you are the bank or the service provider so you missed $10000 cash when you delivered the car, let us say on 1-1-2011, to your customer so this amount is negative.

But the amount you received starting from 1-1-2011 all are positive.

A- In first column A enter:

1. In cell A1 enter the word (Amount).

2. In Cell A2 enter -10000 (minus ten thousand) the value you missed on 1-1-2011.

3. In Cell A3 enter 442 the value you received on 1-1-2011.

4. So on for all installment till A26 which contain the last amount you should pay.

B- In Second column B enter the appropriate date beside each amount till B26 which has the date of 24th installment.

C- In cell A27 enter this “=SUM(A3:A26)” so you get the total of the amounts they have received from you.

D- In cell A28 enter “=XIRR(A2:A26,B2:B26)” (this is the Syntax = XIRR(values,dates) so you get 27.24% as a result.

Excel will use this formula

MS Excel Help
MS Excel Help

You should do same when you get an offer, anyway I will be ready to help calculate the rate for you, if you give all the needed data (cash cost, Initial payment amount, the dates, the monthly installment).

Always calculate before you buy.

Note:this can work for any kind of loans having installments.

Hope it helps.


    0 of 8192 characters used
    Post Comment
    • Taleb80 profile imageAUTHOR

      Taleb AlDris 

      8 years ago

      Thank you Mrs. Denise for stopping by.

      I hope you will not need a Loan.

      Thanks for the comment

    • Denise Handlon profile image

      Denise Handlon 

      8 years ago from North Carolina

      Oooohhhh, I like this hub, Tb80. I bookmarked it for future reference. Nice explanation-very useful. Thanks.

    • Taleb80 profile imageAUTHOR

      Taleb AlDris 

      8 years ago

      Mr. H P Roy

      I agree with you.

      I just want to tell people that it cost more than they think, so they can take the correct decision.

      Thanks for your comment.

    • H P Roychoudhury profile image

      H P Roychoudhury 

      8 years ago from Guwahati, India

      A car with loan will cost you more. But still people go for it because the need of the hour is a car.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)