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How to calculate per diem interest on a loan payoff
Per diem is balance times note rate, divided by the note's day-count year. A worked table on 365 and 360 days, and how to carry a payoff quote forward.
To calculate per diem interest on a loan payoff, multiply the balance by the note’s annual rate and divide by the note’s day-count year, such as 365 or 360. Multiply that daily figure by the days between the quote’s as-of date and the day funds arrive, then add the result to the quoted payoff.
This is an evergreen explainer, not news. This desk read every source named here on 8 October 2026.
How to calculate per diem interest on a loan payoff, worked
Illustrative arithmetic on an assumed $20,000 balance at 7%, not a lender’s quote:
| Basis | Per day | 1 day past quote | 5 days | 10 days |
|---|---|---|---|---|
| 365-day year | $3.8356 | $3.84 | $19.18 | $38.36 |
| 360-day year | $3.8889 | $3.89 | $19.44 | $38.89 |
A 360-day year costs more: the same rate spread over fewer days. Your note states which basis applies. Adventures in CRE calls 30/360, Actual/365 and Actual/360 common among commercial real estate lenders, with Actual/360 costing the most; that page does not cover car or personal loans.
Which days count?
North Shore Bank’s payoff answers say its online Estimated PayOff Amount for RV and boat loans “is only valid for that day”, and that a future-date payoff adds the per diem for each additional day, including the payoff date. The same page says consumer and auto loan quotes are good for 10 days. That is one bank’s procedure, not an industry rule.
Where the as-of date comes from
For home-secured consumer credit, 12 CFR 1026.36(c)(3) requires an accurate payoff balance “as of a specified date”, sent within seven business days of a written request. It does not cover auto or personal loans. Our pieces on the good-through date and why a payoff exceeds the balance cover both sides.
Common questions
What does per diem mean on a car loan payoff?
It is the interest the loan adds for one day. A payoff figure is accurate for one date, so the per diem is what each later day adds. North Shore Bank prints an interest-per-day amount beside its estimated payoff and says to add it for each additional day.
Is the payoff day itself counted?
It depends on the lender. North Shore Bank’s online-banking answer says to add the per diem for each additional day including the payoff date. Other lenders may word it differently; if your statement is silent, ask how the lender counts before you send funds.
How long is a per diem payoff quote good for?
For as long as the lender says. North Shore Bank states its consumer and auto loan payoff quotes are good for 10 days, and mortgage and HELOC payoffs are generally quoted for a specific date. For home loans, the Reg Z text we read sets no window length.
Nothing here is financial advice. Your payoff statement and loan agreement set the real figure; read both, and confirm the per diem and day count with the lender before money moves.