Auto Loan Per Diem Interest Calculator
Planning to pay off or sell your car? The interest on your loan accrues every single day, right up to the payment date.
- Calculate exact daily interest cost.
- Estimate total payoff for any date.
- See how much your rate costs you per month.
Preview Logic: Balance × Rate / 365
What Is Auto Loan Per Diem Interest?
"Per diem" is Latin for "per day." In auto loans, it is the exact amount of interest money your loan generates every 24 hours. Because auto loans are "simple interest" loans, you only pay for the time you have the money.
This metric determines the difference between your "current balance" and your "payoff amount" 10 days from now.
Components of Your Daily Interest
Loan Balance (Principal)
The total amount owed. A higher balance results in a higher daily cost.
Annual Percentage Rate (APR)
The annual cost of borrowing. A higher APR results in a higher daily cost.
Impact Note
Reducing the balance is the only way to mathematically lower your per diem without refinancing.
How to Calculate Auto Loan Per Diem
Balance × (APR / 100) / 365 = Daily Interest
Explanation:
This formula converts your annual rate to a daily rate and then applies it to your current balance.
Note: Most consumer loans use a 365-day year. However, some contracts use a 360-day year (Banker's Rule), which slightly increases your daily cost.
How to Use This Tool
- Log in to your lender's portal or check your Loan Statement.
- Find the "Payoff Amount" (not just the current balance).
- Locate your APR (usually listed near the interest paid section).
- Enter values into the calculator above.
- Use result to plan payoff or sale date.
Understanding Your Per Diem Results
< $2.00 / day
Low cost. This indicates an efficient loan or a small remaining balance.
$2.00 - $6.00 / day
Average. This is typical for standard car loans with moderate terms.
$6.00 - $12.00 / day
High. Likely a large balance or a subprime interest rate.
> $12.00 / day
Very High. Consider refinancing immediately if the rate is the cause.
Cost Comparison Scenarios
| Scenario ($25k Loan) | Daily Cost | Yearly Cost |
|---|---|---|
| 5% APR (Standard) | $3.42 | $1,250 |
| 15% APR (Subprime) | $10.27 | $3,750 |
Insight: Doubling your rate more than doubles your total interest paid over time. Note that monthly payments reduce principal, which then lowers the per diem.
Why Your Daily Interest Changes
Amortization
At the beginning of a loan, per diem is high because the principal balance is at its peak.
Payments
Every time you make a payment, the per diem drops slightly for the next day.
Extra Payments
Principal-only payments drop the per diem significantly faster than scheduled payments.
When to Calculate Per Diem Interest
Selling a Car
You need to know the payoff on the day of sale. Add (Per Diem × Days until sale) to your current quote to estimate the exact amount needed to clear the title.
Refinancing
Determine your "break-even" point. If the per diem is high, refinancing saves more money faster by reducing the daily accrual rate.
Paying Off Early
Calculate exactly how much an extra lump sum reduces your daily interest costs, helping you visualize the savings of early payoff.
Limitations of This Estimation
- 360 vs 365 Day Year: This calculator uses 365 days. Check your contract for "Ordinary Interest" (360 days), which results in a slightly higher cost.
- Fees: This does not include potential late fees or payoff processing fees charged by the lender.
- Processing Time: Weekends and holidays may delay the "funds received" date, affecting the final interest accrued.
Frequently Asked Questions
References & Sources
- Consumer Financial Protection Bureau: "What is a simple interest loan?"
- Federal Trade Commission: "Understanding Vehicle Financing"
Understanding Per Diem Interest
"Per diem" is Latin for "per day." In the context of auto loans, it refers to the amount of interest that accrues on your loan balance every single day. Knowing this figure is crucial if you are planning to pay off your loan early, as the total payoff amount changes daily based on this interest accumulation.
Formula Used
This calculator uses the standard simple interest formula:
Daily Interest = (Current Balance × Annual Interest Rate) ÷ 365
This assumes a 365-day year and does not account for leap years or specific lender variations (some use 360 days).
About the Author
Nithya Madhavan
Web developer and data researcher creating accurate, easy-to-use calculators across health, finance, education, and construction and more. Works with subject-matter experts to ensure formulas meet trusted standards like WHO, NIH, and ISO.