The whole story, as text
How do I read a loan payoff letter?
A payoff letter on $17,289 at 18%. Four numbers matter: the payoff amount, the date it is good through, the interest per day after that date, and any fees. Your last payment posted 12 days ago. How much interest has built up since that payment?
The answer
$102. $8.53 a day for 12 days. The payoff good through today is $17,391.50: the principal balance plus that interest.
Why
Interest is charged by the day, so the payoff moves every day. $102 interest since the last payment, $17,289 principal balance. If the money arrives after the good-through date, the per diem keeps running. Per diem: $17,289 × 18% ÷ 365 = $8.53 a day.
One move
Pay it before the good-through date. On the date: $17,392 payoff, $102 interest since last payment. Ten days late: $17,477 payoff, $188 interest since last payment. Ten days late costs $85 more. Lenders differ on 360 or 365 days and on rounding. The letter's figures are the ones that count.
Ask whether any fee on the letter is a prepayment penalty or an administrative charge, and whether the quoted per diem is on principal only.
Yours
Does refinancing help? runs these numbers for any loan. Nothing you enter leaves your browser.
The longer read
A payoff letter, sometimes called a payoff quote or payoff statement, tells you what it takes to close the loan on a given day. It is not the same as your statement balance, and it changes every day. Here is what is on it and what to do with each number.
The four numbers
Payoff amount. Everything owed if the money arrives on the good-through date: the principal balance, plus interest accrued since your last payment, plus any fees or a prepayment penalty. This is the number a new lender needs when refinancing, and the number to enter as “balance today” in the tools.
Good-through date. The payoff amount is exact only on that day. Pay earlier and you may have overpaid slightly, which most lenders refund. Pay later and interest has kept accruing.
Per-diem interest. The interest added for each day after the good-through date. Multiply it by the number of days late to adjust the payoff. See the question on per-diem interest.
Fees and penalties. Any prepayment penalty, late fees, or processing fee is itemised. Ask about any line you do not recognise.
A worked example
You owe $17,289.14 at 18%. Your last payment posted twelve days ago. The letter shows:
- Principal balance: $17,289.14
- Interest accrued, 12 days at $8.53 a day: $102.36
- Payoff amount, good through the letter’s date: $17,391.50
- Per diem after that date: $8.53
If the money arrives ten days after the good-through date, the payoff is $17,391.50 plus $85.26, or $17,476.76.
What to check
- The balance matches your statement after any payment posted since.
- The interest accrued is roughly the per diem times the days since your last payment.
- Nothing is listed that you did not agree to. A prepayment penalty must be in your contract.
- Whether a refund of overpayment is automatic if you pay before the good-through date.
Questions to ask your lender
- Through what date is this payoff good, and what is the per diem after that?
- Does the payoff include any penalty or fee, and where is it in my contract?
- How do I get written confirmation that the loan is closed once it is paid?
- Will you release any lien or title, and how long does that take?
See it with your own numbers
Enter the payoff amount as “balance today” in Does refinancing help? to compare keeping the loan with a new offer. Drop the payoff letter on the page and it reads the amount for you, in your browser.
Related: Glossary: payoff amount, per-diem interest, prepayment penalty.
Educational tool, not advice. The payoff letter is the authoritative figure.
Written and reviewed by Riverbend Crossroads Digital LLC, Sunday, September 6, 2026. Figures from the Show Real Cost engine, computed exactly and shown to the cent. Educational, not advice; your lender's disclosures are the authoritative figures. How we calculate · Corrections.