1. What is Car Loan Per Diem?

The car loan per diem represents the daily interest amount you pay on your auto loan. It's calculated based on your principal balance and interest rate, divided by 365 days.

2. How Does the Calculator Work?

The calculator uses the per diem formula:

Where:

• \( Principal \) — Current loan balance (USD)
• \( Rate \) — Annual interest rate (unitless)

Explanation: The formula calculates how much interest accrues daily on your car loan.

3. Importance of Per Diem Calculation

Details: Knowing your per diem helps you understand how much interest accrues daily, which is useful when considering early payments or loan refinancing.

4. Using the Calculator

Tips: Enter your current loan balance in USD and your annual interest rate (e.g., 0.05 for 5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate per diem interest?
A: It helps you understand the daily cost of your loan and can show how making early payments saves money.

Q2: Does per diem change over time?
A: Yes, as your principal balance decreases with payments, your per diem will also decrease.

Q3: Is 365 days always used?
A: Some lenders use 360 days for simplicity, but 365 is more accurate for this calculation.

Q4: How can I reduce my per diem?
A: You can reduce it by making extra principal payments or refinancing to a lower interest rate.

Q5: Is this the same as daily simple interest?
A: Essentially yes, per diem is the daily simple interest charge on your loan balance.