A daily interest figure has a calculation basis
For a simple-interest illustration, divide principal multiplied by the annual interest rate by the applicable day-count denominator. At $250,000 and 12% per year on an Actual/365 basis, the unrounded daily amount is approximately $82.1917808.
Using the same principal and rate on an Actual/360 basis produces approximately $83.3333333 per actual day. The choice comes from the loan terms. Neither basis should be silently assumed to apply to every loan.
Multiply before rounding the period interest
For the $250,000, 12%, Actual/365 example, 15 days of simple interest is approximately $1,232.876712, or $1,232.88 rounded to cents. Multiplying the already-rounded display of $82.19 by 15 gives $1,232.85 instead.
That three-cent difference illustrates why a displayed per diem and the internal calculation precision need to be understood. The rounding rules and calculation method in the applicable agreement or system govern the issued statement.
Be explicit about the dates
A good-through date says how long the quoted payoff is intended to remain valid, subject to its stated conditions. The interest-through date, receipt cutoff, and treatment of weekends or later settlement can matter.
Our free calculator uses an explicit number of accrual days, rather than assuming how two dates should be included. It is a simple-interest estimate, not an interpretation of your loan documents.
The payoff is more than principal plus per diem
A final payoff may also depend on existing accrued interest, fees, penalties, credits, held cash, advances, unresolved draws, and receipts that have not yet been applied. The executed documents and recorded activity determine what belongs.
Review each component and its supporting record. A correct daily-interest formula does not establish that the complete payoff is correct.
Use estimates for planning; obtain the actual payoff
Use an estimate to understand the arithmetic and organize a discussion. For settlement, obtain the lender-issued payoff and follow its instructions, including any process for confirming payment information.
AIRE’s payoff workflow is designed to bring the loan terms, recorded activity, adjustments, and good-through date together so a reviewer can see the full picture.