Per diem interest calculator

"Per diem" means "per day". On a simple-interest loan, such as most car loans and personal loans, interest is added every day on the principal still owed. The per diem is that daily amount. A payoff letter quotes it so the payoff can be adjusted to the day the money actually arrives.

Multiply the principal balance by the annual interest rate, then divide by the number of days in the year the lender uses, usually 365 and sometimes 360. Round to the cent. For example, $14,650 × 7.49% ÷ 365 = $3.01 a day. Multiply by the number of days to get the interest for that period: 12 days is $36.12.

It is an older banking convention. Dividing by 360 gives a slightly higher daily amount than dividing by 365, so over a year it adds a little more interest. Neither is wrong on its own; the loan agreement or payoff letter says which the lender uses. This calculator shows both.

A payoff quote is the amount needed to close the loan if the money arrives by a certain date. If it arrives later, add the per diem for each extra day. If it arrives earlier, less interest is owed, and any overpayment is usually refunded. The lender's written payoff statement is the authoritative figure.

Yes. It is based on the principal still owed, so it falls as the balance is paid down. The figure on a payoff letter is the per diem for the balance on that date.