Guide To Excel For Finance: Goal Seek

The Goal Seek function is a great place to kick off the Excel guide for finance. Goal Seek is a valuable feature that lets the user back into the value for an unknown variable in an equation. For example, the typical financing arrangement for leasing a car will usually provide an interest rate and lease term, such as 6% over 60 months for a car valued at $25,000. Using the PMT formula in Excel, the estimated payment for these lease terms is $483.32.

Here is the layout of the key variables, as well as the output provided by Goal Seek:

Car Loan Repayment Schedule
Interest Rate	0.06
Loan Duration	60
Total Loan Amount	25000
Payment	$483.32

But let's say you have a few extra dollars and are interested in knowing how long the loan will last when you spend $500 a month for the same 6% interest rate. Using Goal Seek, here is what the inputs would look like:



According to Goal Seek, upping the monthly payment slightly would shave more than two months off the loan duration. Here are the outputs:

Car Loan Repayment Schedule
Interest Rate	0.06
Loan Duration	57.6801385
Total Loan Amount	25000
Payment	$500.00