1. What is Per Diem Loan Interest?

Per diem loan interest represents the daily interest charge on a loan. It's calculated by dividing the annual interest by 365 days. This helps borrowers understand their daily interest costs.

2. How Does the Calculator Work?

The calculator uses the per diem formula:

Where:

• \( Loan \) — Principal loan amount in USD
• \( Rate \) — Annual interest rate in decimal form (e.g., 0.05 for 5%)

Explanation: The formula calculates how much interest accrues each day on your loan.

3. Importance of Per Diem Calculation

Details: Knowing your daily interest helps with financial planning, especially for short-term loans or when making early payments. It shows exactly how much each day of borrowing costs.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why calculate per diem interest?
A: It helps borrowers understand daily costs, compare loan options, and calculate interest for partial periods.

Q2: Does this account for compounding?
A: No, this is simple daily interest. For compound interest, the calculation would be more complex.

Q3: Should I use 365 or 360 days?
A: Most loans use 365 days, but some use 360. Check your loan agreement for the correct day count.

Q4: How can I reduce my per diem interest?
A: You can reduce it by paying down principal or negotiating a lower interest rate.

Q5: Is this the same as APR?
A: APR includes fees and other costs, while per diem is just the daily interest on the principal.