1. What is Auto Loan Per Diem?

Auto loan per diem refers to the daily interest charge on an auto loan. It represents the amount of interest that accrues each day on the outstanding loan balance, calculated using the annual percentage rate (APR) divided by 365 days.

2. How Does the Calculator Work?

The calculator uses the per diem formula:

Where:

• \( Balance \) — Current loan balance in dollars
• \( APR \) — Annual Percentage Rate (as a percentage)

Explanation: The formula calculates how much interest accrues daily on your auto loan by taking your annual interest rate, converting it to a daily rate, and applying it to your current balance.

3. Importance of Per Diem Calculation

Details: Understanding your daily interest accrual helps you make informed decisions about extra payments, track interest costs between statements, and calculate payoff amounts more accurately.

4. Using the Calculator

Tips: Enter your current loan balance and APR percentage. The calculator will show your daily interest charge. All values must be valid (balance > 0, APR ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: Why calculate per diem interest on auto loans?
A: Knowing your daily interest helps you understand how quickly interest accumulates and can motivate making extra payments to reduce overall interest costs.

Q2: Does per diem change over the loan term?
A: Yes, as your principal balance decreases with each payment, your per diem interest will also decrease accordingly.

Q3: How does per diem affect early payoff calculations?
A: When paying off a loan early, you'll need to pay the remaining principal plus any accrued per diem interest up to the payoff date.

Q4: Is APR the same as interest rate?
A: APR includes both the interest rate and any additional loan fees, providing a more comprehensive view of borrowing costs.

Q5: Can per diem help compare loan offers?
A: Yes, calculating per diem for different loan offers can help you understand the daily cost difference between them.