# How to Figure Payoff on Auto With a Per Diem Loan

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If you get a payoff for a loan which is good for a certain date, you will need the per diem if you want to recalculate the payoff for a new payoff date. You can add the per diem for the extra amount of days needed for the payoff to be received. To calculate the per diem you will need all of the terms that pertain to the loan. If a loan has a variable rate, the per diem could change as well.

• To calculate the payoff and a per diem you will need to calculate the payoff first. If you have a balance of \$12,000 with an interest rate of 7 percent and you just received a payment on November 1, the payoff is calculated from the date of last payment. Assume you will need a payoff on an auto loan which will be good until December 15.

• Take the annual percentage rate of 7 percent and divide it by 360 = .0001944 multiplied by the number of days since the last payment until the payoff date, which is 44 days (29 days in November and 15 days in December), and multiply the result times the balance of \$12,000. This gives you the finance charges in the amount of \$102.64. Take the finance charges and add them to the balance of \$12,000, and the payoff is \$12,102.64 which is acceptable until December 15.

• Calculate the per diem. If the payoff won't be received until after the payoff date of December 15, you will need the per diem. Take the annual percentage rate of 7 percent and divide it by 360 then multiply it by the balance of \$12,000, which equals \$2.91. The per diem will be \$2.91. If the check for the payoff won't be received until 10 days after the payoff, you multiply \$.291 times 10 which equals \$29.10.

• Add the amount of \$29.10 to the payoff of \$12102.64, and the new payoff will be \$12,131.74 which will be good until December 25. It's just a matter of adding \$2.91 to the payoff figure for every day after the original payoff date that the new payoff will be received.

• Deduct any payments received from the payoff. If a regular payment is received on November 10, you will need to recalculate the payoff and the per diem. First determine how much of the monthly payment goes to interest and how much goes towards the principal balance. If the regular payment is \$287.35, you calculate the interest from the date of last payment which is November 1 until November 10. Take the annual percentage rate of 7 percent and divide it by 360 = .0001944 times 9 days (number of days since the last payment) times the balance of \$12,000 equals \$20.99 which is 9 days of interest. Now take the monthly payment of \$287.35 and subtract the interest of \$20.99 which gives you \$266.36. Subtract \$266.36 from the balance of \$12,000, and the new balance after receiving a payment is \$11,733.64. Now calculate a new payoff and per diem using the new balance of \$11,733.64.

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