365/360 Loan Calculator
Many commercial lenders quote a rate but accrue interest on a 360-day year while charging it across all 365 days — so you pay more than the headline rate suggests. See the difference.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Loan amount
- $250,000
- Quoted interest rate
- 7%
- Loan term (years)
- 10
effective rate is 7.10%, not 7.00%
- 30/360 payment$2,902.71
- 365/360 payment$2,915.25
- 30/360 total interest$98,325
How the extra interest on the 365/360 method changes with loan amount
Holding the other inputs at the example above, here is how the result moves as loan amount changes.
| Loan amount | Extra interest on the 365/360 method | 30/360 payment |
|---|---|---|
| $100,000 | $602 | $1,161.08 |
| $250,000 | $1,505 | $2,902.71 |
| $500,000 | $3,010 | $5,805.42 |
| $1,000,000 | $6,020 | $11,610.85 |
The math behind it
The calculator amortizes your loan twice at the same quoted rate. The standard version uses a 30/360 convention. The 365/360 version keeps your rate but rescales it by 365/360 — a lender computes the daily rate as the annual rate divided by 360, then charges that daily rate on all 365 days of the year, so you effectively pay interest for five extra days each year. The headline figure is the difference in total interest between the two, and the effective rate shown is your quoted rate multiplied by 365/360.
Assumptions & limits
- Both loans use the same quoted rate and the same term; only the day-count convention differs.
- The 365/360 effect is modeled as a flat 365/360 uplift on the rate, which is the standard result of dividing by 360 and charging 365 days.
- A fixed rate is assumed for the full term — variable-rate commercial notes would compound the effect further.
- No origination fees, prepayment penalties or compounding quirks beyond the day-count difference are included.
Common questions
Why does a 365/360 loan cost more than the stated rate suggests?
The lender divides your annual rate by 360 to get a daily rate, then charges that daily rate on every one of the year's 365 days. Because the daily rate was built on a short 360-day year but applied across a full 365-day year, you pay roughly five extra days of interest annually. That raises your true cost by a factor of 365/360, or about 1.4%, on top of the quoted rate.
Who uses the 365/360 method?
It is common on commercial and business loans, construction financing and some lines of credit. Consumer mortgages and most personal loans use a plain monthly or 30/360 convention. If you are signing a commercial note, check the interest-calculation clause — the day-count basis is where the extra cost hides.
Is the 365/360 method legal?
Yes. It is a widely accepted convention in commercial lending, provided the loan documents disclose it. The point of this calculator is to translate that fine print into a dollar figure so you can compare it against a straightforward loan or negotiate the basis.