Private note calculation guide
Promissory Note Interest Calculator: Interest Between Exact Dates
Promissory notes often require interest to be calculated over exact date ranges rather than rounded months. The correct method depends on the note rate, day-count basis, date-count rule, and whether the principal changes during the period.
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Use the note rate and stated day-count method
Start with the annual rate in the promissory note and the required 360-, 365-, Actual/Actual, or other convention. Do not substitute APR unless the note actually uses it for interest accrual.
Count the exact interest days
Identify whether the start date, end date, both dates, or neither date are included. One extra counted day changes the result by one per-diem amount.
Keep a fixed balance separate from changing balances
If the principal stays unchanged, one interest-between-dates calculation can work. If a payment or advance changes principal, the period must be divided into balance intervals.
Use actual payment history when the note is irregular
Late, skipped, partial, principal-only, fee, credit, and advance transactions should be processed in chronological order so each later interest interval uses the correct balance.
On a $50,000 note at 8% using Actual/365, the per diem is about $10.96. Twenty-four counted days produce about $263.01 of simple interest while the balance remains unchanged.
Frequently asked questions
How is promissory note interest calculated?
Apply the note rate and required day-count basis to the outstanding principal for the applicable number of interest days.
Can I calculate note interest between two exact dates?
Yes. Use the Interest Between Dates Calculator and choose the date-count rule and day-count basis required by the note.
What if a payment occurs during the date range?
The principal changes after the payment, so calculate separate intervals or use the Irregular Payment Loan Calculator to process the actual transaction date.
Does a promissory note always use simple interest?
No. The note controls. Some notes use simple daily interest, while others can use different compounding, payment, capitalization, or default-interest rules.