Additional interest clause: Copy, customize, and use instantly
Introduction
An additional interest clause outlines the terms under which an additional interest rate will apply under certain conditions, such as late payments, breaches of contract, or other events specified in the agreement. This clause helps protect the lender or service provider by ensuring compensation for the delay, risk, or extra costs incurred due to non-compliance or other triggers outlined in the agreement. It provides clarity on the specific circumstances under which the additional interest will be applied, the rate, and the duration for which it will be charged.
Below are templates for additional interest clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard additional interest clause
This version sets a standard additional interest rate for late payments.
If any payment due under this Agreement is not received within [number] days of the due date, the Borrower shall pay an additional interest rate of [percentage]% per annum on the outstanding balance, calculated from the due date until the payment is made in full.
Additional interest clause for breach of agreement
This version applies additional interest in the case of a breach of the agreement.
In the event of a breach of any provision of this Agreement, the Borrower shall pay an additional interest rate of [percentage]% per annum on the outstanding balance or the amount in dispute, from the date the breach occurs until the breach is cured or the matter is resolved.
Additional interest clause for delayed disbursement
This version applies additional interest if the disbursement is delayed.
If the Lender fails to disburse the agreed funds within [number] days from the agreed date, the Borrower will be entitled to receive an additional interest rate of [percentage]% per annum on the undisbursed amount until the funds are fully disbursed.
Additional interest clause for overdue obligations
This version applies additional interest on overdue obligations.
If any obligation under this Agreement remains unpaid for more than [number] days past the due date, the Borrower shall pay an additional interest charge of [percentage]% per annum on the overdue amount, calculated from the due date until full payment is made.
Additional interest clause with penalty for extended delay
This version imposes a higher interest rate for extended delays.
If any amount due under this Agreement is not paid within [number] days of the due date, the Borrower will incur an additional interest charge of [percentage]% per annum. If the overdue payment exceeds [specified period], the interest rate will increase to [higher percentage]% per annum for the remaining overdue period.
Additional interest clause for non-compliance
This version applies additional interest for non-compliance with contract terms.
In the event of non-compliance with the terms of this Agreement, the Borrower shall pay an additional interest rate of [percentage]% per annum on any outstanding amounts, starting from the date of non-compliance and continuing until compliance is restored.
Additional interest clause for delayed repayment
This version applies additional interest for delayed repayment.
The Borrower agrees to pay an additional interest rate of [percentage]% per annum on any outstanding principal amount in the event of delayed repayment. This additional interest will be calculated on the overdue amount from the due date until full repayment is made.
Additional interest clause with capped additional interest
This version includes a cap on the additional interest.
If any amount remains unpaid for more than [number] days, the Borrower shall incur an additional interest charge of [percentage]% per annum on the outstanding amount. However, the total additional interest charged shall not exceed [specified amount].
Additional interest clause for specific event triggers
This version applies additional interest for specific event triggers.
In the event that [specified event, e.g., failure to provide required documentation, early termination of the agreement] occurs, the Borrower shall be required to pay an additional interest charge of [percentage]% per annum on the outstanding balance. This interest shall apply from the date the event occurs until it is remedied or the situation is resolved.
Additional interest clause for early repayment
This version applies additional interest for early repayment.
If the Borrower repays the loan or obligation in full before the agreed term, an additional interest rate of [percentage]% per annum will be charged on the outstanding balance for the period between the repayment date and the original due date.
Additional interest clause for change in interest rate
This version adjusts the interest rate under certain conditions.
If the Borrower’s credit rating changes or if the Borrower defaults on any payment, the interest rate on the outstanding loan balance will increase by [percentage]% per annum until the Borrower rectifies the situation or complies with the terms of this Agreement.
Additional interest clause with escalating interest
This version applies escalating interest rates for continuous default.
If any payment remains overdue for more than [number] days, an additional interest rate of [percentage]% per annum will be applied to the overdue amount. If the overdue period exceeds [number] days, the interest rate will escalate to [higher percentage]% per annum, continuing until the amount is paid.
Additional interest clause for tax-related delays
This version applies additional interest due to tax-related delays.
If the Borrower fails to pay any taxes or government-imposed charges related to this Agreement on time, an additional interest rate of [percentage]% per annum will be applied to the unpaid amount until the taxes are paid.
Additional interest clause for partial payments
This version applies additional interest on partial payments.
If the Borrower makes partial payments on the loan or other obligations under this Agreement, the outstanding balance will incur an additional interest rate of [percentage]% per annum. This will apply until the full amount owed is paid off.
Additional interest clause for financial instability
This version applies additional interest due to financial instability.
If the Borrower’s financial situation deteriorates or if the Borrower experiences significant financial instability, the Lender may apply an additional interest charge of [percentage]% per annum on the outstanding loan amount. This additional interest will apply until the Borrower’s financial stability is restored.
Additional interest clause for third-party enforcement costs
This version applies additional interest for enforcement costs.
If any third-party enforcement is required to collect overdue payments, the Borrower will incur an additional interest charge of [percentage]% per annum on the outstanding balance, to cover the costs of collection or legal fees incurred by the Lender.
Additional interest clause for late submission of reports
This version applies additional interest for late submission of reports or documents.
If the Borrower fails to submit any required reports or documents within the agreed-upon timeline, an additional interest rate of [percentage]% per annum will apply to any outstanding obligations under this Agreement until the required reports or documents are provided.
Additional interest clause for payment default in installments
This version applies additional interest for payment default in installments.
If the Borrower defaults on any installment payment due under this Agreement, an additional interest charge of [percentage]% will apply to the outstanding installment amount. This interest will be compounded monthly until the installment is paid in full.
Additional interest clause for breaches of confidentiality
This version applies additional interest for breaches of confidentiality.
In the event of a breach of the confidentiality provisions of this Agreement, the Borrower will be required to pay an additional interest charge of [percentage]% per annum on any outstanding amounts until the breach is remedied and full compliance is restored.
Additional interest clause with fee for partial drawdown
This version includes additional interest for partial drawdown of funds.
If the Borrower draws less than the full amount of the committed funds under this Agreement, an additional interest rate of [percentage]% will be charged on the unutilized portion of the commitment, payable quarterly.
Additional interest clause with adjustment for market changes
This version adjusts interest based on market conditions.
If market interest rates increase by more than [specified percentage], the additional interest rate on the outstanding loan balance will increase by [specified percentage] to reflect the market adjustment. This adjustment will be applied for the remainder of the term.
Additional interest clause with commission for delayed performance
This version applies additional interest for delays in performance.
If the Borrower fails to meet performance milestones as outlined in this Agreement, an additional interest rate of [percentage]% per annum will apply to any outstanding balances, calculated from the date of the performance delay until the issue is resolved.
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.