To determine the amount of interest you will be required to pay each month, use the following formula called the Simple Daily Interest formula:

Simple Daily Interest Formula
Number of days since last payment
x
Principal Balance Outstanding
x
Interest Rate Factor
=
Interest Amount

Practice Example: Let's say the remaining balance on your loan is $9,500.00. You sent in a payment of $160.00, 32 days after your previous month's payment. Your interest rate is 8.25% (interest rate factor is .00022587).

32 (days) x $9,500.00 (PBO) x .00022587 (interest rate factor)

You would pay $68.66 toward interest and $91.34 toward the principal balance. This would leave you with a loan balance of $9,408.66 after the $160.00 payment was applied.