How daily interest works
The yearly rate is divided by the number of days in the year to give a daily rate, which is applied to the balance. A 9% loan of £20,000 accrues about £4.93 a day.
The convention matters: dividing by 365 gives a slightly lower daily charge than dividing by 360. Check your agreement.
Worked example
£20,000 at 9% on a 365-day basis accrues £4.93 a day. Over 30 days the interest is £147.95.
That is why a settlement quote taken mid-month differs from the statement balance: the balance is fixed, but the interest keeps growing until the money arrives.
When it matters
Daily interest matters most when you settle early, make a late payment or change payment date. A few days can shift the figure by tens of pounds on a large balance.
Ask the lender which day basis it uses and whether interest is charged to the day of settlement.
Inputs for the auto loan daily interest calculator
Loan balance
The amount owed that interest is charged on.
Yearly interest rate
The note rate from your loan contract.
Days in the year
365 or 360, as set out in the agreement.
From
The date interest starts building, such as your last payment.
To
The date you want the interest up to.
CALCULATOR QUESTIONS
Auto loan daily interest calculator questions
How much interest accrues each day?
About £4.93 on £20,000 at 9% on a 365-day basis.
Does 360 versus 365 matter?
Yes. A 360-day basis produces a slightly higher daily charge for the same rate.
Is daily interest included in the APR?
The APR reflects the cost over a year including timing, but the daily convention still affects settlement figures.
Why is my payoff higher than the statement?
Interest accrues between the statement date and the day the payoff arrives.