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Interest methods · actual/365

Actual/365 Loan Calculator: Help Borrowers Compare Notes on a Level Footing

The 365/365 calculator amortizes a loan with a daily rate based on a true 365-day year, so a year's interest equals the stated rate. It reports the payment, total interest, total of payments, effective annual rate and the interest saved against the same loan accrued on a 365/360 basis. Brokers use it when competing notes carry different accrual clauses.

When one lender quotes actual/365 and another actual/360 at the same rate, the borrower deserves to see the dollar difference.

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Why would a borrower compare 365/365 with 365/360 accrual?

Because two offers at the same stated rate are not the same price if they count days differently. The borrower is often an investor or business owner holding two term sheets, or someone negotiating a private note with a seller or individual lender.

For an illustrative $750,000 at 6.5% over 20 years, the actual/365 payment is about $5,592 and the 365/360 payment about $5,632. Over the term the actual/365 note saves roughly $9,600 in interest. The borrower wants to know whether that is worth negotiating for, and whether it outweighs a difference in fees or prepayment terms on the other offer.

Who benefits from putting a 365/365 calculator on their site?

Brokers and originators who regularly place loans with lenders that use different accrual methods: commercial and multifamily brokers, investor-loan specialists and those arranging private or seller-financed notes. For a team focused on conventional and government home loans, it adds little; those loans typically accrue monthly and the borrower never sees a day-count clause.

Its value is as a fairness check. Pair it with the 365/360 calculator so a borrower can run the same amount, rate and term under each method and see the gap in dollars. That turns a technical clause into a point the borrower can weigh against fees and terms.

The lead carries the amount, rate, term, payment, effective annual rate and the interest saved versus 365/360. Use it to:

  • Confirm which offer uses which method, and whether a leap year is handled by dividing by 365 or 366.
  • Compare all-in cost, not just accrual: origination fees, closing costs, prepayment penalties and any balloon.
  • Identify negotiating room. Some lenders will agree to a different accrual basis or offset it elsewhere; it never hurts the borrower to ask.

What arrives in your CRM

What the numbers tell you about the borrower

  • Interest Saved vs 365/360Tells you how much is at stake in the accrual clause on this borrower's loan. A few thousand dollars may be worth a negotiating ask; a larger sum may justify choosing a different lender outright.
  • Interest Rate (%)If it matches a rate on a competing quote, the borrower is likely comparing two specific offers. Ask for both term sheets so you can compare fees and terms along with the accrual basis.
  • Loan Term (years)Longer terms magnify the day-count difference because more interest is charged overall. A borrower entering 20 or 25 years has more at stake in the clause than one entering 5.
  • Total Interest PaidShows the full interest picture under actual/365 for this scenario. Borrowers who submit while focused on it tend to be cost-driven and appreciate a structured comparison of every offer's lifetime cost.

A first message that uses their numbers

What should the first follow-up cover?

Hi {first name}, I saw you ran an actual/365 calculation on our site. If you're comparing it with a note that uses 365/360, the accrual difference is one piece; fees, prepayment terms and the maturity date matter too. Send me the offers you have and I'll help you compare them on the same basis.

Present accrual-method differences factually and avoid disparaging a named competing lender; compare the documented terms only.

Where this calculator earns its place

  1. 01

    Commercial or investor loan comparison page

    Borrowers there are most likely to hold notes with different day-count clauses.

  2. 02

    Widget alongside the 365/360 and standard loan calculators

    Lets the borrower run identical inputs under each method in one place.

  3. 03

    Resource page for seller-financed or private-note buyers

    Private parties often draft notes without realizing the accrual basis matters.

Limits worth knowing

  • With the averaged month this model uses, the 365/365 result matches a standard monthly-accrual loan; a real note's interest varies slightly month to month.
  • Leap-year handling differs by lender and is not modeled.
  • The calculator assumes full amortization with no fees, balloon or prepayment.

Calculator disclaimer: Estimates only. The 365/365 (actual/365) method charges a daily rate based on a 365-day year, so there is no day-count premium over the nominal rate. This model uses an average month of 365/12 days. Confirm the exact accrual method with your lender.

Definitions in the calculator

365/365 method
An interest-accrual method, also called actual/365, that computes a daily rate by dividing the annual rate by 365 and charges it for each actual day. A full year’s interest equals the stated rate exactly, so there is no day-count premium. This calculator compares it with the 365/360 method to show the difference.
Day-count convention
The rule a loan uses to turn an annual rate into interest for a given period — which year length is the divisor and which days are counted. Common conventions are 30/360, actual/365 (365/365) and actual/360 (365/360). The same nominal rate produces different interest under each, so the convention belongs in any loan comparison.
Daily rate
The interest rate charged per day. Under 365/365 it is the annual rate divided by 365; at 6.5%, about 0.017808% a day. Multiplied by the balance and the days in the period, it gives the interest due. This calculator uses an average month of 365/12 days, which makes the monthly rate equal to the annual rate divided by 12.
Nominal interest rate
The stated annual rate in the loan documents, before accounting for the day-count method or compounding. Under 365/365, a year of simple interest equals the nominal rate. Two loans quoted at the same nominal rate can still cost different amounts if one of them accrues on a 360-day year.
Effective annual rate
The true yearly cost once monthly compounding is included. For a 6.5% nominal rate under 365/365, this calculator shows about 6.697%; the gap from 6.5% comes only from compounding monthly payments, not from the day count. The same loan under 365/360 would show about 6.793%, the difference being the day-count premium.
365/360 method
A method, common in commercial lending, that divides the annual rate by 360 but charges it for all 365 days, making the true cost about 1.4% higher than the stated rate. The “interest saved vs 365/360” result shows what the same loan would cost extra under that method — about $552 on $100,000 at 6.5% over 10 years.
Leap year
A 366-day year. Under a strict actual/365 method, lenders handle it in different ways — some still divide by 365 and charge an extra day, others divide by 366. The effect is small but real. This calculator uses an average month of 365/12 days and does not model leap years.
Amortization
Paying off a loan through equal scheduled payments that each cover that period’s interest plus part of the principal, so the balance reaches zero by the last payment. Early payments are mostly interest; as the balance falls, more of each payment goes to principal. Under 365/365 the schedule matches a standard monthly amortization.

Terms on this page

Pairs well with

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FAQ · 8 questions

Questions about this calculator

What is the 365/365 or actual/365 interest method?

It divides the annual rate by 365 to get a daily rate and charges it for each actual day, so a full year's simple interest equals the stated rate exactly. At 6.5%, the daily rate is about 0.017808%. There is no day-count premium, unlike the 365/360 method, which charges 365 days at a 360-day rate.

How much does actual/365 save compared with 365/360?

On $750,000 at 6.5% over 20 years, the payment is about $5,592 under actual/365 and about $5,632 under 365/360, and the interest saved over the term is roughly $9,600. The saving scales with the balance, rate and term, so larger and longer loans show bigger differences. Keep the comparison in context alongside any fee differences.

Why is the effective annual rate above the stated rate if there is no premium?

Because interest compounds monthly when payments are made monthly. For a 6.5% loan, the calculator shows an effective annual rate of about 6.697%. That gap comes only from compounding, not from the day count; under 365/360 the same loan would show about 6.793%. Comparing effective rates is a quick way to put two notes with different accrual clauses on the same footing.

How do leap years affect a 365/365 loan?

It depends on the note. Some lenders still divide by 365 and charge 366 days of interest in a leap year, while others divide by 366. The effect is small, about one extra day of interest in some years. This calculator uses an averaged month and does not model leap years, so check the note's wording.

Is this calculator useful for a residential mortgage website?

Only occasionally. Typical US home loans accrue interest monthly, so homebuyers rarely face this choice. It is most useful for brokers handling commercial, investor, bridge or private loans, where accrual clauses vary between lenders and borrowers compare term sheets closely. If your pipeline is mostly purchase and refinance loans for owner-occupants, your space is better spent on payment, affordability and DTI calculators that most visitors actually need.

How should I use the 365/365 calculator in a sales conversation?

As a neutral comparison tool. Run the borrower's loan under both methods and show the dollar difference, then put it beside fees, prepayment terms and maturity. If your offer uses actual/365, it is a fair point to make; if it does not, the borrower will appreciate the transparency. Accuracy builds more trust with these borrowers than spin ever will.

What information is in a lead from this calculator?

The borrower's contact details and consent, loan amount, rate, term, monthly payment, total interest, total of payments, effective annual rate and interest saved versus 365/360, with the page and traffic source. Those leads land in the built-in CRM and can be sent to HighLevel, Zapier or Make by webhook on eligible plans. Repeat calculations by the same borrower are added to their history.

Can I customize the wording for a commercial audience?

Yes. You can rewrite every label, heading and button and choose a theme to match your brand. Many commercial brokers relabel the call to action to something like "Compare my term sheets" so the lead form matches what the visitor actually wants next. You can also switch off the "Powered by" credit and serve the calculator from your own domain on plans that include white-label.

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