What is a daily per diem interest accrual?

Per diem interest is the interest charged on a loan on a daily basis. The finance charge each payment is interest calculated since the last time a payment was made. For example, if you make a payment every 30 days you would see 30 days’ worth of interest deducted from your payment. The rest of your payment would go to paying the principal balance down.

Members can pay off loans early, with no prepayment penalties, which helps decrease the amount of interest paid over the life of the loan.

Citadel calculates per diem interest to cover the period between the time a loan closes and the day before repayment officially begins. In order to calculate the per diem interest amount, member’s will be charged a daily interest rate.

For example, if a member decided on a 60 month term for a car loan and makes monthly payments, the interest will be calculated based on the rate and the amount of days a payment was made until the loan closing date. By making extra or larger payments the member is technically saving. The per diem goes down as the loan balance goes down. So the per diem may have started at $5.257, but by the end of the loan term could be down to $1.254.