1. What is Per Diem Interest?

Per diem interest is the daily interest charge on a loan. It represents the amount of interest that accrues each day based on the loan amount and annual interest rate.

2. How Does the Calculator Work?

The calculator uses the per diem interest formula:

Where:

• \( Loan \) — Principal loan amount in USD
• \( Rate \) — Annual interest rate in decimal form
• 365 — Number of days in a year

Explanation: The formula calculates how much interest accrues daily by dividing the annual interest by 365 days.

3. Importance of Per Diem Calculation

Details: Understanding daily interest helps borrowers estimate interest costs between payments, during loan processing periods, or when making early payments.

4. Using the Calculator

Tips: Enter loan amount in USD and interest rate as a decimal (e.g., 5% = 0.05). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: While some lenders use 360 days, this calculator uses 365 for standard annual calculation. Check with your lender for their specific method.

Q2: Does this include compound interest?
A: No, this calculates simple daily interest. Compound interest would require knowing the compounding frequency.

Q3: How accurate is this for mortgage loans?
A: This provides a good estimate, but actual mortgage per diem may vary slightly based on the lender's specific calculation method.

Q4: Can I use this for credit card interest?
A: Credit cards typically use average daily balance methods which are more complex than this simple per diem calculation.

Q5: How does leap year affect per diem?
A: For leap years, dividing by 366 instead of 365 would slightly reduce the daily interest amount.