Default Interest
/ˈdɪfɔːlt ˈɪntrɪst/
Definitions
- (n.) An additional interest rate charged on overdue payments beyond the original contract rate as a penalty for defaulting.
The lender imposed default interest on the late payment to compensate for the delayed receipt of funds.
Forms
- default interest
- default interests
Related terms
See also
Commentary
Default interest is typically contractually specified to incentivize timely payments, distinct from ordinary interest rates; drafters should specify its rate and conditions clearly.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.