1. What is Payoff Per Diem?

Per Diem refers to the daily interest amount calculated on a loan balance. It represents the amount of interest that accrues each day based on the current balance and annual interest rate.

2. How Does the Calculator Work?

The calculator uses the Per Diem formula:

Where:

• \( Balance \) — Current loan amount in USD
• \( Rate \) — Annual interest rate in decimal form (e.g., 0.05 for 5%)
• 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: Knowing your daily interest helps understand how quickly interest accrues, plan payoff strategies, and calculate exact payoff amounts for specific dates.

4. Using the Calculator

Tips: Enter the current loan balance in USD and the annual interest rate in decimal form (e.g., 0.075 for 7.5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: Most modern loans use actual/365 day count convention. Some loans may use 360 days - check your loan documents.

Q2: How accurate is this calculation?
A: This provides a close estimate, but exact amounts may vary slightly based on the lender's specific calculation methods.

Q3: Does this include principal payments?
A: No, this calculates only the daily interest. Principal payments would reduce the balance and thus future per diem amounts.

Q4: How can I use this for payoff planning?
A: Multiply the per diem by the number of days until your planned payoff date to estimate interest that will accrue.

Q5: What if my rate changes?
A: You'll need to recalculate with the new rate. Variable rate loans will have changing per diem amounts.