Per Diem Interest

Full definition

Per diem interest = (APR / 365) x Outstanding principal balance Example: You have a $10,000 personal loan at 15% APR. Per diem interest = (0.15 / 365) x $10,000 = $4.11 per day. When per diem interest matters: Payoff amount accuracy: If you request a payoff quote and then wait 5 days to actually pay, you owe the quoted amount plus 5 days of per diem interest ($20.55 in the example). Most lenders provide payoff quotes that are valid for 10-30 days and include a per diem amount so you can calculate the correct total at the time of payment. Final payment: Your scheduled final payment may not exactly match the true payoff if payments were made even one day early or late throughout the life of the loan. The lender adjusts the final payment using per diem interest. Loan closing: In mortgage lending, per diem interest covers the days between your closing date and the end of that month, because the first mortgage payment does not include interest for those days. In personal lending, the same logic applies if a loan funds mid-month. Early payoff savings: Paying 10 days early on a $10,000 loan at 15% saves 10 x $4.11 = $41.10. Modest for small loans but meaningful for large balances or long payoff lead-times. Always request an updated payoff quote on or close to the day you intend to pay to ensure you clear the balance completely.

• Payoff Amount
• Prepayment penalty
• Amortization
• Principal