What Is a Per Diem (Daily) Interest Calculator?
A per diem interest calculator works out how much interest accrues on a loan or account balance each day. "Per diem" is Latin for "per day," and the figure is widely used in mortgages, payoff statements, prorated interest at closing, and loan servicing. Knowing the daily rate lets you see exactly what a balance costs you for every extra day it stays unpaid.
How to Use It
Enter three values: the principal (the outstanding balance), the annual interest rate as a percentage, and the number of days you want to project. The calculator returns the daily interest amount and the total interest accrued over the chosen period. This tool uses a 365-day year (actual/365), the most common convention for consumer loans.
The Formula Explained
The daily interest is the principal multiplied by the daily rate. The daily rate is the annual rate divided by 365:
$$\text{Per Diem} = \text{Principal} \times \left( \frac{\text{Annual Rate}}{365} \right)$$
The total over a stretch of days is simply the per diem amount times the number of days. This is simple interest — it does not compound the daily charges back into the balance.
Worked Example
Suppose you owe $10,000 at a 5% annual rate. The daily rate is \(0.05 \div 365 = 0.00013699\). Multiply by $10,000 to get a per diem of about $1.37. Over 30 days that is roughly $$1.3699 \times 30 = \$41.10$$ in interest.
FAQ
Does this compound? No. It applies simple daily interest; daily charges are not added back to the principal.
Why 365 and not 360? 365 (actual/365) is standard for most consumer loans. Some commercial loans use a 360-day year, which would yield a slightly higher daily figure.
Where is per diem interest used? Commonly on mortgage payoff quotes, prorated closing-day interest, and late-payment calculations.
