Enter the annual interest rate (%) and the current principal value into the calculator to determine the per diem interest rate and amount.
Per Diem Formula
The following formula is used to calculate per diem interest.
DI = AR / 365 * P
- Where DI is the per diem amount ($)
- AR is the annual rate (%)
- P is the principal amount ($)
Per Diem Definition
Per diem typically refers to the daily amount paid on a loan or mortgage. It comes from the meaning of the word per diem, which means by the day in Latin.
When is per diem interest used?
Per diem interest is often used when analysis of a loan is being done on a daily basis. Since long-term amounts are hard to comprehend, breaking down an interest into a per diem interest can help simplify it.
What is Per Diem interest?
A per diem interest is a non-compounding daily interest rate equivalent to the annual interest rate divided by 365. It’s important to note that this is not compounding, otherwise, there would be a big difference between the daily rate and annual rate.
How to calculate per diem interest?
- First, determine the annual interest rate.
- Next, divide the annual rate by 365.
- Finally, multiply that value by the principal to calculate the per diem amount.