How to Calculate the Per Diem on a Payoff Amount

When calculating the exact payoff amount for a loan, the per diem refers to the amount of daily interest paid. Since loans are not always paid on the last day of the month, you will need to calculate the per diem to determine the exact amount of interest you owe on the loan. For example, if you pay off a loan on the 13th day of the month, you will owe 13 days' worth of interest.

Instructions

1. Find your original loan amount and the interest rate you pay on the loan. For example, assume the original loan was for $250,000 and the interest rate is 5 percent.

2. Multiply the original loan amount by the interest rate to calculate the yearly interest paid on the loan. Continuing the example, $250,000 x .05 = $12,500.

3. Divide the yearly interest paid by 365, the number of days in a year. Continuing the example, $12,500 / 365 = $34.25. This figure represents the per diem interest you would use to calculate the payoff amount for your loan.

References

• Mortgage Insider: Mortgage Payoff Amount More Than Balance
• Mortgage QNA: How to Calculate Per Diem Interest?