Computation of interest clause: Copy, customize, and use instantly
Introduction
A computation of interest clause defines how interest is to be calculated on outstanding amounts, such as loans, overdue payments, or balances under a contract. This clause ensures that both parties understand how interest will accrue, the rate applied, and the time periods for calculation. The computation can include simple or compound interest, and it often outlines the frequency of interest accrual.
Below are templates for computation of interest clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Simple interest computation clause
This variation applies to simple interest computation.
Interest on any unpaid amount under this Agreement shall be calculated at a rate of [interest rate, e.g., 5%] per annum. The interest shall accrue on a daily basis, beginning from the due date of the payment until the outstanding balance is paid in full. Interest shall be calculated on the principal amount only and will not compound.
Compound interest computation clause
This variation applies to compound interest computation.
Interest on any overdue amount under this Agreement shall be calculated at a rate of [interest rate, e.g., 5%] per annum, compounded [frequency, e.g., annually, monthly, etc.]. Interest will be calculated on the initial principal amount as well as any accrued interest, and will be compounded on [specific date, e.g., the first day of each calendar month].
Interest computation for overdue payments
This variation applies to interest computation for overdue payments.
If any payment due under this Agreement is not received by the due date, the overdue amount shall accrue interest at a rate of [interest rate, e.g., 5%] per annum, calculated daily, until payment is made in full. The interest shall be added to the outstanding amount and will be payable along with the principal sum.
Interest computation for loans
This variation applies to interest computation for loan agreements.
Interest on any loan provided under this Agreement shall accrue at a rate of [interest rate, e.g., 7%] per annum, calculated based on the outstanding loan balance. Interest shall be computed on a monthly basis and compounded at the end of each month. Payments made will first be applied to accrued interest, with the remainder applied to the principal balance.
Default interest rate clause
This variation applies to interest computation in the case of default.
In the event of default in payment under this Agreement, the outstanding balance shall accrue interest at a rate of [higher interest rate, e.g., 12%] per annum, compounded monthly, starting from the date of default until the full amount is paid. This default rate is in addition to any other remedies available under this Agreement.
Interest computation for early payment discounts
This variation applies to interest computation for early payment discounts.
If payment is made prior to the due date, a discount of [specific percentage, e.g., 2%] will be applied to the principal amount, and no interest will accrue. If the payment is not made within the discount period, interest will accrue at a rate of [interest rate, e.g., 6%] per annum on the unpaid balance, calculated daily.
Interest computation on extended payment terms
This variation applies to interest computation for extended payment terms.
In the event that the payment terms are extended under this Agreement, interest on any outstanding balance will be calculated at a rate of [interest rate, e.g., 4%] per annum, based on the extended payment schedule. Interest will accrue daily from the original due date until the balance is fully paid.
Interest computation for partial payments
This variation applies when partial payments are made.
If partial payments are made under this Agreement, interest will continue to accrue on the remaining balance at a rate of [interest rate, e.g., 5%] per annum. Each partial payment will first be applied to the accrued interest, with the remainder reducing the principal balance.
Interest computation for lump sum payments
This variation applies when a lump sum payment is made.
In the event of a lump sum payment under this Agreement, interest shall be computed on the outstanding balance up to the date of the lump sum payment. The interest rate applicable will be [interest rate, e.g., 4%] per annum, calculated daily on the principal amount until the payment is received.
Interest computation for deferred payments
This variation applies to interest computation for deferred payments.
If payment is deferred under this Agreement, interest will accrue at a rate of [interest rate, e.g., 6%] per annum on the deferred amount, calculated from the original due date. Interest will be compounded [frequency, e.g., annually, quarterly] and will be due at the time the deferred payment is made.
Interest computation for overdue installments
This variation applies when installments are overdue.
If any installment under this Agreement is overdue, the overdue amount shall accrue interest at a rate of [interest rate, e.g., 5%] per annum, calculated on a daily basis, from the due date until the amount is paid in full. The interest will be added to the outstanding installment and must be paid along with the principal amount.
Interest computation on delayed deliveries
This variation applies to interest computation for delayed deliveries.
In the event that the delivery is delayed under this Agreement, interest will accrue on the outstanding payment due at a rate of [interest rate, e.g., 7%] per annum, calculated from the original due date of payment. The interest will be computed on a daily basis until payment is made in full.
Interest computation for unsettled invoices
This variation applies to interest computation for unsettled invoices.
If any invoice remains unpaid beyond the due date, interest will be charged at a rate of [interest rate, e.g., 8%] per annum, calculated daily. Interest will be added to the unpaid invoice balance and will be payable by the Customer along with the outstanding invoice amount.
Interest computation for overdue credit balances
This variation applies to interest computation for overdue credit balances.
If there is an overdue credit balance under this Agreement, interest will accrue on the outstanding amount at a rate of [interest rate, e.g., 6%] per annum, compounded [frequency, e.g., monthly, annually]. Interest will be calculated from the date the credit balance becomes overdue until the balance is cleared.
Interest computation for late payments with grace period
This variation applies to interest computation for late payments with a grace period.
If payment is not made within the grace period of [specific number of days, e.g., 10 days] following the due date, interest will be charged at a rate of [interest rate, e.g., 5%] per annum, calculated daily on the outstanding balance. The grace period will not apply to any other fees or penalties outlined in this Agreement.
Interest computation for loans with fixed repayment terms
This variation applies to loans with fixed repayment terms.
Interest on the loan balance will accrue at a fixed rate of [interest rate, e.g., 5%] per annum, calculated on the remaining principal amount. The interest will be compounded [frequency, e.g., annually, monthly] and added to the loan balance, with payments applied to both principal and accrued interest as per the agreed repayment schedule.
Interest computation for late penalty charges
This variation applies when interest is charged as a penalty for late payments.
If a payment is not made within [specific number of days, e.g., 30 days] of the due date, a penalty interest rate of [penalty interest rate, e.g., 10%] per annum will apply to the overdue amount, calculated daily. This penalty rate will apply in addition to any regular interest charges for overdue payments.
Interest computation for delayed final payment
This variation applies to interest computation for delayed final payment.
The final payment due under this Agreement shall accrue interest at a rate of [interest rate, e.g., 6%] per annum, calculated from the final payment due date until the full amount is paid. The interest will be compounded [frequency, e.g., monthly] and added to the final payment balance.
Interest computation for non-payment of early termination fees
This variation applies when early termination fees are not paid on time.
If the early termination fee remains unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 7%] per annum, calculated from the due date until the full fee is paid. Interest will be calculated on a daily basis and added to the unpaid fee amount.
Interest computation for unpaid royalties
This variation applies to interest computation for unpaid royalties.
If royalties are not paid within [specific number of days, e.g., 30 days] of the due date, interest will accrue on the overdue amount at a rate of [interest rate, e.g., 6%] per annum, calculated daily. The royalties due, along with the accrued interest, shall be payable by the Client upon notice of non-payment.
Interest computation for overdue service fees
This variation applies to interest computation for overdue service fees.
If any service fees remain unpaid after the due date, interest will accrue on the overdue amount at a rate of [interest rate, e.g., 5%] per annum, calculated daily. Interest will be added to the unpaid service fees and must be paid along with the principal amount upon settlement.
Interest computation for unpaid invoices with tiered rates
This variation applies when interest rates are tiered based on the duration of non-payment.
If an invoice remains unpaid for [specific number of days, e.g., 30 days], interest will be charged at a rate of [interest rate, e.g., 4%] per annum. If the invoice remains unpaid for [specific number of days, e.g., 60 days], the interest rate will increase to [higher interest rate, e.g., 6%] per annum, calculated daily. The total outstanding amount will include both the principal and any accrued interest.
Interest computation for delayed milestone payments
This variation applies when payments are made in milestones.
If a milestone payment is delayed, interest will accrue at a rate of [interest rate, e.g., 6%] per annum, calculated from the original due date until the milestone payment is received. Interest will be computed on a daily basis and added to the outstanding milestone balance.
Interest computation for late contract renewal payments
This variation applies when a contract renewal payment is delayed.
If payment for the contract renewal is not received within [specific number of days, e.g., 15 days] after the due date, interest will accrue at a rate of [interest rate, e.g., 5%] per annum, calculated daily. The renewal fee plus accrued interest must be paid to maintain the contract in effect.
Interest computation for advance payment shortfalls
This variation applies when advance payments are not fully made.
If an advance payment is insufficient or delayed, interest will be charged on the outstanding shortfall at a rate of [interest rate, e.g., 7%] per annum, calculated daily. The interest will be added to the remaining balance of the advance payment until the full payment is made.
Interest computation for late royalty payments
This variation applies to interest computation for late royalty payments.
If royalty payments are not made by the due date, interest will accrue on the overdue amount at a rate of [interest rate, e.g., 8%] per annum, calculated daily, until the balance is paid in full. Interest will be applied to the outstanding balance each day until the full amount is settled.
Interest computation for unpaid deposits
This variation applies to interest computation for unpaid deposits.
In the event of an unpaid deposit, interest will accrue at a rate of [interest rate, e.g., 5%] per annum, calculated daily, from the due date until the deposit is paid in full. The accrued interest will be added to the deposit amount and must be paid together.
Interest computation for overdue balances on installment plans
This variation applies to interest computation for overdue installment plans.
If any installment under this Agreement is overdue, interest will be charged on the overdue balance at a rate of [interest rate, e.g., 6%] per annum, compounded [frequency, e.g., monthly]. Interest will accrue daily and will be added to the overdue balance until the installment is fully paid.
Interest computation for overdue debt payments
This variation applies when a debt payment is overdue.
If any debt payment is not made by the due date, the outstanding debt will accrue interest at a rate of [interest rate, e.g., 10%] per annum, calculated daily, from the due date until the full amount is paid. The accrued interest will be added to the debt principal and must be paid in full.
Interest computation for delayed payment on rental fees
This variation applies to rental agreements when payment is delayed.
If rental fees are not paid by the due date, interest will accrue at a rate of [interest rate, e.g., 4%] per annum, calculated daily, on the unpaid rent balance. The accumulated interest will be added to the rental fee and payable upon settlement.
Interest computation for overdue consulting fees
This variation applies to consulting fees that are overdue.
If any consulting fees remain unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 5%] per annum, calculated daily. The accumulated interest will be added to the unpaid consulting fees and must be paid by the Client along with the principal amount.
Interest computation for late property purchase payments
This variation applies when payments for property purchases are delayed.
If the payment for the property purchase is delayed, interest will accrue at a rate of [interest rate, e.g., 6%] per annum, calculated daily, on the overdue amount. The interest will be applied to the outstanding balance until it is paid in full.
Interest computation for unpaid delivery charges
This variation applies to unpaid delivery charges.
If any delivery charges are not paid by the due date, interest will accrue at a rate of [interest rate, e.g., 4%] per annum, calculated daily. The unpaid delivery charges and the accrued interest must be paid in full by the due date set for the next payment.
Interest computation for overdue subscription fees
This variation applies to subscription fees that are overdue.
If the subscription fee is not paid by the due date, interest will be charged at a rate of [interest rate, e.g., 8%] per annum, calculated from the due date until the full amount is paid. Interest will be compounded [monthly/annually] and added to the outstanding balance.
Interest computation for delayed project payments
This variation applies to project payments that are delayed.
If any project payments are not made by the due date, interest will accrue on the overdue amount at a rate of [interest rate, e.g., 5%] per annum, calculated daily. Interest will be calculated on the outstanding balance and must be paid with the overdue payment.
Interest computation for late contract performance payments
This variation applies to performance-based payments in contracts that are delayed.
If payment for completed milestones or contract performance is delayed, interest will accrue at a rate of [interest rate, e.g., 7%] per annum, calculated daily, from the agreed payment date until the full payment is received.
Interest computation for overdue legal fees
This variation applies when legal fees remain unpaid.
If any legal fees remain unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 6%] per annum, calculated daily. The unpaid legal fees and any accrued interest must be paid by the Client along with the principal amount.
Interest computation for late payment of advance royalties
This variation applies to the late payment of advance royalties.
If any advance royalties are not paid by the due date, interest will accrue at a rate of [interest rate, e.g., 5%] per annum, compounded monthly, from the due date until the full payment is made. The unpaid royalties and the accrued interest will be payable by the Licensee.
Interest computation for delayed payment of insurance premiums
This variation applies when insurance premiums are paid late.
If any insurance premium is not paid by the due date, interest will accrue on the overdue premium at a rate of [interest rate, e.g., 6%] per annum, calculated daily, until the amount is paid in full. The interest will be applied to the overdue amount and must be paid with the premium.
Interest computation for overdue royalty payments in licensing agreements
This variation applies when royalty payments in licensing agreements are overdue.
If the royalty payments under this licensing Agreement are not made on time, interest will accrue at a rate of [interest rate, e.g., 7%] per annum, calculated daily on the overdue balance. The accrued interest will be added to the royalty payments and payable by the Licensee along with the principal balance.
Interest computation for overdue service charges
This variation applies when service charges are overdue.
If any service charges remain unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 5%] per annum, calculated daily. The unpaid service charges and the accrued interest must be paid in full by the due date set for the next service charge.
Interest computation for delayed installment payments
This variation applies when installment payments are delayed.
If any installment payment under this Agreement is delayed, interest will accrue at a rate of [interest rate, e.g., 6%] per annum, calculated daily on the overdue amount. The accumulated interest will be added to the unpaid installment balance and must be paid along with the next installment.
Interest computation for late settlement of debts
This variation applies when debts are settled late.
If any debt due under this Agreement remains unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 8%] per annum, calculated daily from the due date until the debt is paid in full. The interest will be added to the outstanding debt and payable by the Debtor along with the principal amount.
Interest computation for overdue contract sums
This variation applies when contract sums are overdue.
If the contract sum remains unpaid after the due date, interest will be calculated at a rate of [interest rate, e.g., 5%] per annum, compounded [monthly/annually], until the full payment is made. The interest will be added to the outstanding contract sum.
Interest computation for late payments on commercial transactions
This variation applies to late payments on commercial transactions.
If any payment under this commercial transaction is not received by the due date, interest will be charged at a rate of [interest rate, e.g., 7%] per annum, calculated daily. The interest will be compounded [frequency, e.g., monthly] and added to the overdue amount.
Interest computation for late deposit payments
This variation applies when deposit payments are late.
If any deposit payment remains unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 6%] per annum, calculated from the due date. The interest will be compounded [monthly] and added to the unpaid deposit balance.
Interest computation for overdue loan repayment
This variation applies to overdue loan repayments.
If a loan repayment is overdue, interest will accrue on the unpaid loan balance at a rate of [interest rate, e.g., 10%] per annum, calculated daily. The interest will be added to the outstanding loan balance and must be paid in full.
Interest computation for late payment of advance payments
This variation applies to late payments of advance payments.
If any advance payment under this Agreement is not made by the due date, interest will accrue at a rate of [interest rate, e.g., 5%] per annum, compounded [monthly/annually], from the due date until the advance payment is received.
Interest computation for overdue account balances
This variation applies when account balances are overdue.
If an account balance remains overdue, interest will accrue at a rate of [interest rate, e.g., 6%] per annum, calculated daily. The interest will be added to the overdue balance and must be paid with the original amount due.
Interest computation for late settlement of outstanding invoices
This variation applies to late settlement of invoices.
If any invoice remains unpaid beyond the due date, interest will accrue at a rate of [interest rate, e.g., 4%] per annum, compounded monthly. Interest will be calculated on the outstanding invoice balance and must be paid in full along with the original amount.
Interest computation for overdue payments on goods or services
This variation applies to overdue payments for goods or services.
If payment for goods or services is not made by the due date, interest will accrue on the overdue balance at a rate of [interest rate, e.g., 6%] per annum, calculated daily. The accumulated interest will be added to the outstanding payment and must be paid along with the original sum.
Interest computation for unpaid commissions
This variation applies to unpaid commissions.
If any commission due under this Agreement remains unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 5%] per annum, calculated on a daily basis. The unpaid commissions and the accrued interest will be due and payable by the payor.
Interest computation for late payment on supply agreements
This variation applies to late payments in supply agreements.
If any payment due under a supply Agreement is delayed, interest will accrue on the overdue amount at a rate of [interest rate, e.g., 7%] per annum, compounded monthly. Interest will be calculated from the due date until the payment is made in full.
Interest computation for overdue payments in installment contracts
This variation applies when payments are overdue in installment contracts.
If any installment under this Agreement is overdue, interest will accrue at a rate of [interest rate, e.g., 8%] per annum, calculated daily, on the unpaid portion of the installment. Interest will continue to accrue on the outstanding balance until fully paid.
Interest computation for late payment on rent agreements
This variation applies to late payments on rent agreements.
If rent is not paid by the due date, interest will accrue on the overdue rent amount at a rate of [interest rate, e.g., 5%] per annum, calculated daily. The accumulated interest will be added to the overdue rent and must be paid together with the next rental payment.
Interest computation for overdue payments on loans
This variation applies to overdue loan payments.
If any loan repayment is not received by the due date, interest will accrue on the overdue loan amount at a rate of [interest rate, e.g., 10%] per annum, calculated daily. The interest will be applied to the outstanding balance and must be paid in full along with the principal.
Interest computation for delayed royalty payments
This variation applies to delayed royalty payments.
If royalty payments remain unpaid after the due date, interest will accrue on the overdue balance at a rate of [interest rate, e.g., 6%] per annum, calculated daily. The accumulated interest will be added to the overdue royalties and payable upon settlement.
Interest computation for unpaid late fees
This variation applies when late fees are unpaid.
If any late fees remain unpaid after the due date, interest will accrue at a rate of [interest rate, e.g., 7%] per annum, calculated daily. The interest will be added to the unpaid late fees and must be paid in full along with the principal amount.
Interest computation for overdue insurance premiums
This variation applies to overdue insurance premiums.
If an insurance premium payment is overdue, interest will accrue on the unpaid amount at a rate of [interest rate, e.g., 5%] per annum, compounded [monthly/annually]. The interest will continue to accrue on the outstanding balance until it is fully paid.
Interest computation for late payments on franchise fees
This variation applies to late payments of franchise fees.
If any franchise fees remain unpaid after the due date, interest will accrue on the overdue balance at a rate of [interest rate, e.g., 6%] per annum, calculated daily. The interest will be added to the outstanding fees and must be paid along with the balance.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.