1. What is Daily Loan Interest?

Daily loan interest is the amount of interest that accrues on a loan balance each day. It's calculated based on the principal balance and the annual interest rate, divided by 365 days.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• Balance — Current loan principal amount
• Annual Interest Rate — The yearly interest rate (as a percentage)
• 365 — Number of days in a year

Explanation: The formula calculates what portion of the annual interest would accrue each day based on the current balance.

3. Importance of Daily Interest Calculation

Details: Understanding daily interest helps borrowers see how much their loan costs each day, make informed decisions about extra payments, and understand how interest accrues between payments.

4. Using the Calculator

Tips: Enter the current loan balance and annual interest rate. The calculator will show the estimated daily interest amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator work for credit cards?
A: Yes, it works for any type of loan or credit product where interest accrues daily.

Q2: Why divide by 365 instead of 360?
A: Most loans use actual/365 day count convention. Some loans may use 360 days - check your loan terms.

Q3: How can I reduce my daily interest?
A: You can reduce daily interest by making extra principal payments to lower your balance or refinancing to a lower interest rate.

Q4: Is daily interest the same as compound interest?
A: No, this shows simple daily interest. Compound interest would include interest on previously accrued interest.

Q5: How accurate is this calculation?
A: This provides a good estimate, but actual daily interest may vary slightly based on your lender's specific calculation methods.