Interest rate clause: Copy, customize, and use instantly
Introduction
An interest rate clause defines the rate at which interest will accrue on any outstanding amounts due under the agreement. It sets the terms for calculating interest, including the rate, the period over which it is applied, and the circumstances under which interest may be charged. This clause ensures clarity regarding how financial obligations are to be met and provides both parties with an understanding of their financial responsibilities.
Below are templates for interest rate clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard interest rate clause
This version provides a general framework for interest rates.
The Parties agree that any outstanding payments due under this Agreement shall accrue interest at a rate of [X]% per annum, calculated on a daily basis, starting from the date the payment is due until it is paid in full.
Interest rate clause with provision for default interest
This version includes a higher rate for late payments.
If any amount payable under this Agreement is not paid by the due date, such amount shall accrue interest at a rate of [X]% per annum, or [Y]% above the base rate, whichever is higher, from the date the payment is due until it is paid in full.
Interest rate clause with provision for compounding interest
This version includes compounding interest.
Interest on any overdue amounts will be calculated at a rate of [X]% per annum and will compound monthly. The interest will accrue on both the principal amount and any previously accrued interest that has not been paid.
Interest rate clause with provision for adjustable interest rate
This version allows for an adjustable interest rate.
The interest rate applicable to outstanding amounts under this Agreement shall be [X]%, subject to adjustment on an annual basis in accordance with changes in the [specified index or reference rate], with any change becoming effective [X] days after notice is provided to the other Party.
Interest rate clause with provision for fixed interest rate
This version specifies a fixed interest rate.
The Parties agree that any overdue amounts under this Agreement will incur interest at a fixed rate of [X]% per annum. The interest will be calculated on a daily basis from the date the payment is due until the outstanding amount is fully paid.
Interest rate clause with provision for early payment discount
This version provides a discount for early payments.
If the outstanding balance is paid within [X] days of the due date, the Party making the payment will receive a [Y]% discount on the total amount due. If the payment is not made within the discount period, the full amount will accrue interest at a rate of [X]% per annum.
Interest rate clause with provision for late payment penalty
This version includes a late payment penalty.
If payment is not received within [X] days of the due date, a late payment penalty of [Y]% will be applied to the overdue amount. In addition to the penalty, the overdue amount will accrue interest at a rate of [Z]% per annum from the due date until full payment is made.
Interest rate clause with provision for change of interest rate upon default
This version changes the rate after default.
In the event of default, the interest rate on any outstanding amount will increase to [X]% per annum. The new rate will apply from the date of default and will remain in effect until the overdue balance is paid in full.
Interest rate clause with provision for monthly compounding
This version applies monthly compounding.
Any unpaid amounts under this Agreement will accrue interest at a rate of [X]% per annum, compounded monthly. The interest will be calculated on the outstanding balance each month and will be added to the principal amount.
Interest rate clause with provision for interest on early withdrawal
This version applies to early withdrawal scenarios.
If the Party withdrawing early from the Agreement is required to make a payment, interest will be charged on the early withdrawal amount at a rate of [X]% per annum from the date of withdrawal until payment is made.
Interest rate clause with provision for interest during dispute resolution
This version includes interest during dispute resolution.
If there is a dispute regarding the amount owed under this Agreement, interest will continue to accrue on any undisputed amounts at a rate of [X]% per annum until the dispute is resolved and the full payment is made.
Interest rate clause with provision for different rates for different payment terms
This version applies different rates for different terms.
Payments under this Agreement will incur interest at a rate of [X]% per annum for amounts due within [X] days. If payment is not made within that period, the interest rate will increase to [Y]% per annum on the overdue balance.
Interest rate clause with provision for interest on refunds
This version applies interest on refunds.
If a refund is due under this Agreement, interest will be charged at a rate of [X]% per annum on the refunded amount from the date the payment was made until the refund is processed.
Interest rate clause with provision for prorated interest
This version calculates prorated interest.
Interest on overdue payments will be calculated at a rate of [X]% per annum, prorated for the number of days the payment is overdue. The interest will be compounded on a monthly basis.
Interest rate clause with provision for different rates for different currencies
This version specifies different rates for different currencies.
If the payment is made in [currency], interest will accrue at a rate of [X]%. If the payment is made in any other currency, the interest rate will be [Y]%, as determined by the applicable exchange rate at the time of the payment.
Interest rate clause with provision for simple interest
This version uses simple interest.
Any overdue amounts under this Agreement will incur simple interest at a rate of [X]% per annum. The interest will be calculated on the principal balance and will not compound.
Interest rate clause with provision for grace period before interest accrues
This version includes a grace period.
The Parties agree that there will be a [X] day grace period for any overdue payments. After the grace period, interest will accrue on the outstanding amount at a rate of [Y]% per annum, calculated on a daily basis.
Interest rate clause with provision for interest on unpaid fees
This version applies to unpaid fees.
If any fees owed under this Agreement are not paid by the due date, the unpaid fees will accrue interest at a rate of [X]% per annum, starting from the due date and continuing until full payment is made.
Interest rate clause with provision for rate adjustment based on market conditions
This version allows rate adjustment based on the market.
The interest rate on any outstanding payments may be adjusted annually based on the prevailing market interest rates or a relevant index. The adjusted rate will be communicated in writing to the other Party before it takes effect.
Interest rate clause with provision for multiple overdue payments
This version applies to multiple overdue payments.
If multiple payments under this Agreement are overdue, interest will be charged on each overdue payment individually at a rate of [X]% per annum. The interest will be calculated separately for each payment from its due date.
Interest rate clause with provision for accrued interest upon termination
This version applies to interest upon termination.
If this Agreement is terminated for any reason, any outstanding amounts will continue to accrue interest at a rate of [X]% per annum from the date of termination until the balance is paid in full.
Interest rate clause with provision for annual interest cap
This version includes a cap on interest.
The Parties agree that interest on overdue amounts will be charged at a rate of [X]% per annum. However, the total interest accrued during the term of the Agreement will not exceed [X]% of the total outstanding balance.
Interest rate clause with provision for rate of return on investment
This version links interest to investment return.
The Parties agree that any overdue payments will accrue interest at a rate of [X]% per annum, equivalent to the average rate of return on [Party A]’s investment portfolio, calculated annually.
Interest rate clause with provision for reduced interest for early settlement
This version offers reduced interest for early settlement.
The Parties agree that any overdue payments will accrue interest at a rate of [X]% per annum. If the outstanding balance is paid within [X] days of the due date, the interest rate will be reduced to [Y]% per annum.
Interest rate clause with provision for interest on outstanding balances due to late invoicing
This version applies to late invoicing.
If an invoice is issued later than the agreed-upon due date, any outstanding amounts will accrue interest at a rate of [X]% per annum, calculated from the original due date of payment.
Interest rate clause with provision for monthly interest charges
This version applies monthly interest charges.
The Parties agree that any overdue amounts will accrue interest at a rate of [X]% per annum. The interest will be charged monthly on the outstanding balance, calculated on a pro-rata basis.
Interest rate clause with provision for different interest rates for different payment methods
This version applies different rates for payment methods.
The Parties agree that interest on overdue payments will be calculated at a rate of [X]% per annum if paid by [payment method]. If payment is made by any other method, interest will accrue at a rate of [Y]% per annum.
Interest rate clause with provision for tiered interest rates
This version applies tiered interest rates.
Interest on overdue payments will accrue at a rate of [X]% per annum for the first [X] days. After [X] days, the interest rate will increase to [Y]% per annum, and after [X] additional days, the rate will further increase to [Z]% per annum.
Interest rate clause with provision for interest on withheld payments
This version applies interest on withheld payments.
If any payment due under this Agreement is withheld by [Party B] for any reason, interest will accrue on the withheld amount at a rate of [X]% per annum from the due date of payment until the amount is released.
Interest rate clause with provision for accrued interest on delayed invoices
This version addresses delayed invoices.
If invoices are not issued on time, any payments that are due will accrue interest at a rate of [X]% per annum, starting from the original due date as agreed upon in the Agreement.
Interest rate clause with provision for fixed interest during the agreement term
This version specifies a fixed interest rate for the duration of the Agreement.
[Party A] agrees to charge [Party B] a fixed interest rate of [X]% per annum on any overdue amounts. This rate will remain constant throughout the term of the Agreement, regardless of market changes.
Interest rate clause with provision for rate increase after extended non-payment
This version increases the rate after extended non-payment.
If payment is not made within [X] days after the due date, the interest rate on any overdue amounts will increase to [Y]% per annum. The increased rate will apply for the remainder of the term of the Agreement until the balance is paid in full.
Interest rate clause with provision for variable rate based on market conditions
This version applies a variable rate based on market conditions.
Interest on overdue payments will accrue at a rate of [X]% per annum, subject to adjustment based on the prevailing market rate. The interest rate will be reviewed every [X] months and adjusted accordingly to reflect market conditions.
Interest rate clause with provision for rate changes upon renegotiation
This version includes provisions for renegotiating the rate.
The Parties agree that the interest rate applied to overdue amounts may be renegotiated annually based on the terms of the Agreement. Any changes to the interest rate will be documented in writing and agreed upon by both Parties.
Interest rate clause with provision for discount for advance payments
This version offers a discount for advance payments.
If [Party B] makes a full advance payment before the due date, [Party A] agrees to provide a [X]% discount on the total amount. If payment is made after the due date, interest will accrue at a rate of [Y]% per annum on the overdue balance.
Interest rate clause with provision for interest charges on partial payments
This version applies interest to partial payments.
If only a partial payment is made, interest will accrue on the unpaid balance at a rate of [X]% per annum, calculated from the date the payment is due until the remaining balance is paid in full.
Interest rate clause with provision for early payment rebate
This version offers a rebate for early payments.
If [Party B] makes payment within [X] days of the due date, they will receive a rebate of [X]% of the total payment amount. If payment is not made within this period, interest will accrue at a rate of [Y]% per annum on the outstanding amount.
Interest rate clause with provision for compounded monthly interest
This version uses compounded monthly interest.
The interest on overdue amounts will accrue at a rate of [X]% per annum, compounded monthly. Interest will be calculated on the outstanding balance, including any previously accrued interest, and will be added to the principal.
Interest rate clause with provision for interest rate cap
This version includes a cap on the interest rate.
The interest rate applicable to overdue amounts will not exceed [X]% per annum, even if market conditions warrant a higher rate. This cap ensures that interest charges do not exceed a predefined threshold.
Interest rate clause with provision for interest on partial contract balances
This version applies interest to partial contract balances.
For any partial payments made under this Agreement, interest will be charged at a rate of [X]% per annum on the outstanding balance. The interest will be calculated and charged monthly, based on the remaining balance.
Interest rate clause with provision for fixed monthly payment amount
This version specifies fixed monthly payments with interest.
[Party B] agrees to pay a fixed amount of [X] per month towards the outstanding balance, with interest accruing on the unpaid portion at a rate of [Y]% per annum. The fixed monthly amount will remain constant unless otherwise agreed.
Interest rate clause with provision for seasonal interest changes
This version includes seasonal changes in the rate.
Interest on overdue amounts will accrue at a rate of [X]% per annum. However, the interest rate will increase by [Y]% during peak seasons, defined as [specific months], due to increased operational costs.
Interest rate clause with provision for additional rates for specific breaches
This version sets different rates for specific breaches.
If [Party B] breaches any provision of this Agreement, including late payments, the interest rate on overdue amounts will increase to [X]% per annum. This increase will remain in effect until the breach is remedied and all overdue amounts are paid in full.
Interest rate clause with provision for interest-free grace period
This version includes an interest-free grace period.
[Party A] agrees to provide [Party B] with an interest-free grace period of [X] days following the payment due date. After the grace period, any outstanding amounts will accrue interest at a rate of [X]% per annum, calculated daily from the date the payment was originally due.
Interest rate clause with provision for specific default events
This version ties interest rate increases to specific default events.
In the event of a material breach of this Agreement, including failure to make a payment, [Party B] shall be liable for interest on overdue amounts at a rate of [X]% per annum. The interest rate will increase to [Y]% per annum if the breach remains unresolved after [X] days.
Interest rate clause with provision for periodic rate reviews
This version includes periodic reviews of the interest rate.
The Parties agree that the interest rate applicable to overdue amounts under this Agreement will be reviewed annually. Adjustments to the rate, based on prevailing market conditions, will be made by mutual agreement and documented in writing.
Interest rate clause with provision for maximum interest accrual
This version includes a maximum interest accrual.
Interest on overdue amounts will accrue at a rate of [X]% per annum. However, the total interest charged under this Agreement will not exceed [Y]% of the outstanding principal balance, regardless of the duration of the overdue payment.
Interest rate clause with provision for cumulative interest calculation
This version uses cumulative interest calculation.
Interest on overdue amounts will accrue at a rate of [X]% per annum, compounded monthly. Any interest not paid will be added to the principal balance, and interest will be calculated on the new balance in subsequent periods.
Interest rate clause with provision for flat-rate interest on late payments
This version applies a flat-rate interest.
The Parties agree that any overdue amounts will incur interest at a flat rate of [X]% per annum. The interest will be applied to the outstanding amount and will remain fixed for the entire term of the overdue period, regardless of the duration of the overdue balance.
Interest rate clause with provision for interest for failure to meet milestones
This version applies interest if milestones are not met.
If either Party fails to meet the agreed-upon milestones under this Agreement, the Party at fault will be liable for interest at a rate of [X]% per annum on any unpaid amounts. This interest will be calculated from the date the milestone was due until the outstanding amount is settled.
Interest rate clause with provision for interest based on outstanding principal
This version ties interest to the outstanding principal.
The interest on overdue amounts will be calculated based on the outstanding principal at a rate of [X]% per annum. Interest will be calculated daily and applied to the remaining balance until the full amount is paid.
Interest rate clause with provision for alternative payment arrangements
This version includes alternative payment arrangements.
In the event that a payment under this Agreement is overdue, the Parties agree to explore alternative payment arrangements, including installment plans. If no alternative arrangement is agreed upon, interest will accrue at a rate of [X]% per annum on the overdue amount.
Interest rate clause with provision for interest suspension during dispute resolution
This version suspends interest during dispute resolution.
If a payment dispute arises under this Agreement, interest will be suspended during the period in which the dispute is being resolved. Once the dispute is resolved and the payment is made, interest will resume at a rate of [X]% per annum from the original due date.
Interest rate clause with provision for interest based on daily rates
This version calculates interest on a daily basis.
Any overdue amounts will accrue interest at a rate of [X]% per annum, calculated on a daily basis. Interest will be calculated based on the actual number of days the payment is overdue, starting from the due date until the payment is made.
Interest rate clause with provision for market-based interest rate adjustments
This version ties the interest rate to market conditions.
The interest rate for overdue payments will be calculated based on the base rate of [central bank or financial institution] plus [X]%. The rate will adjust based on fluctuations in the base rate, with changes taking effect immediately.
Interest rate clause with provision for separate interest rates for different payment types
This version applies different rates for different payment types.
Interest on overdue amounts will accrue at a rate of [X]% per annum for payments made by bank transfer. If payment is made by credit card, the interest rate will increase to [Y]% per annum to account for processing fees and delays.
Interest rate clause with provision for interest on unapproved late charges
This version applies interest on late charges.
If any charges are deemed overdue due to non-payment or late payment, interest will accrue on those charges at a rate of [X]% per annum, compounded monthly, until full payment is made.
Interest rate clause with provision for interest suspension due to goodwill arrangement
This version suspends interest for goodwill reasons.
In certain circumstances, the Parties may agree to suspend interest on overdue amounts for a period of up to [X] days due to a goodwill arrangement. After the agreed period, interest will resume at a rate of [X]% per annum.
Interest rate clause with provision for rate changes due to late payment
This version includes a rate change after late payment.
If [Party B] does not make payments within [X] days of the due date, the interest rate on overdue amounts will increase by [X]% per annum. The increased rate will apply from the day the payment is late until it is fully settled.
Interest rate clause with provision for interest caps on extended payments
This version caps interest on extended payments.
The interest on overdue payments will accrue at a rate of [X]% per annum. However, the total interest charged on the overdue amount will be capped at [Y]% of the principal amount, even if the overdue payment continues for an extended period.
Interest rate clause with provision for early payment benefit
This version rewards early payments.
If [Party B] pays the full outstanding amount before the due date, they will receive a discount of [X]% on the total amount. However, if payment is not received within the agreed time frame, interest will be charged at a rate of [Y]% per annum.
Interest rate clause with provision for rate adjustments based on late payment history
This version adjusts rates based on payment history.
[Party A] may adjust the interest rate applied to overdue amounts based on [Party B]’s payment history. If [Party B] consistently makes late payments, the interest rate will increase to [X]% per annum for future overdue amounts.
Interest rate clause with provision for interest on unpaid tax amounts
This version applies interest to unpaid tax amounts.
If any taxes owed under this Agreement are not paid by the due date, they will accrue interest at a rate of [X]% per annum from the due date until paid in full. The interest will be calculated daily and compounded monthly.
Interest rate clause with provision for interest on unpaid penalties
This version applies interest to unpaid penalties.
If any penalties due under this Agreement remain unpaid, they will accrue interest at a rate of [X]% per annum, starting from the due date of the penalty payment until full settlement.
Interest rate clause with provision for interest accrual during suspension periods
This version includes interest accrual during suspension.
If performance is suspended due to a Force Majeure Event, interest will continue to accrue on outstanding amounts at a rate of [X]% per annum from the original due date until the suspension is lifted and payment is made.
Interest rate clause with provision for interest-free period after contract execution
This version allows an interest-free period after contract execution.
The Parties agree that the first [X] days following the execution of this Agreement will be an interest-free period. After this period, any unpaid amounts will accrue interest at a rate of [X]% per annum from the due date.
Interest rate clause with provision for minimum interest charges
This version sets a minimum interest charge.
If the interest calculated on overdue amounts is less than [X], a minimum interest charge of [X] will apply. This minimum charge will be added to the principal amount for each overdue payment.
Interest rate clause with provision for variable interest rate based on creditworthiness
This version ties the rate to creditworthiness.
The interest rate on any overdue amounts will initially be [X]% per annum. If [Party B]’s credit rating drops below [Y] during the term of this Agreement, the interest rate will increase to [Z]% per annum.
Interest rate clause with provision for interest on unpaid invoices in case of dispute
This version applies interest during disputes.
In case of a dispute regarding an unpaid invoice, the amount in dispute will accrue interest at a rate of [X]% per annum. The interest will be calculated from the due date until the dispute is resolved and payment is made.
Interest rate clause with provision for interest rate change notification
This version requires notification of rate changes.
[Party A] may change the interest rate applied to overdue amounts by providing [Party B] with [X] days’ written notice. Any rate change will apply to all overdue amounts from the date specified in the notice.
Interest rate clause with provision for different rates for different amounts
This version applies different rates for different amounts.
The interest rate for overdue amounts will be [X]% per annum for balances up to [Y]. For any amount exceeding [Y], the interest rate will increase to [Z]% per annum, calculated on the total outstanding balance.
Interest rate clause with provision for an interest-bearing account
This version applies interest to an account.
Any unpaid balances under this Agreement will be placed in an interest-bearing account and accrue interest at a rate of [X]% per annum. The interest will be added to the outstanding balance on a monthly basis.
Interest rate clause with provision for interest on installment payments
This version applies interest on installment payments.
For payments made in installments, the remaining balance will accrue interest at a rate of [X]% per annum from the due date of each installment until the full balance is paid.
Interest rate clause with provision for interest based on local market rates
This version ties the interest rate to local market rates.
The interest rate on overdue amounts will be calculated based on the prevailing local market rates. The rate will be determined by [specified financial institution or index], plus [X]% to account for administrative costs.
Interest rate clause with provision for compounded interest after [X] days
This version allows for compounded interest after a specified period.
Any overdue amounts will accrue interest at a rate of [X]% per annum, compounded monthly, starting after [X] days from the due date of the payment. The interest will be calculated on the principal plus previously accrued interest.
Interest rate clause with provision for interest-only payments
This version allows for interest-only payments.
During the first [X] months of the Agreement, only interest payments of [X]% per annum on the outstanding balance will be due. After this period, both principal and interest will be due for payment in full.
Interest rate clause with provision for interest payments to be made in advance
This version requires advance interest payments.
Interest on the outstanding balance will be charged at a rate of [X]% per annum. The interest for each quarter must be paid in advance, and any unpaid interest will be added to the principal and will accrue further interest.
Interest rate clause with provision for annual recalculation of interest rate
This version recalculates the interest rate annually.
The interest rate applicable to any overdue amounts will be recalculated annually based on the interest rates prevailing in the market or as determined by [specified financial institution]. The recalculated rate will be effective immediately after the recalculation.
Interest rate clause with provision for interest rate escalation
This version includes an escalation clause.
The interest rate for overdue amounts will initially be [X]% per annum. If payment remains overdue for more than [X] days, the interest rate will escalate to [Y]% per annum until the outstanding balance is paid in full.
Interest rate clause with provision for early interest payment discount
This version offers a discount for early interest payments.
If [Party B] chooses to pay the interest portion of the overdue amount within [X] days from the due date, a [Y]% discount will be applied to the interest charged. If payment is made after this period, the full interest rate of [X]% per annum will apply.
Interest rate clause with provision for prorated interest on late payments
This version applies prorated interest.
The interest rate of [X]% per annum will be applied to overdue amounts, with interest calculated on a prorated basis from the due date until the payment is made. The interest will be calculated for each day the amount remains unpaid.
Interest rate clause with provision for interest on partially paid balances
This version applies interest to partial payments.
If partial payments are made, interest will be charged on the remaining balance at a rate of [X]% per annum. Interest will be recalculated after each partial payment and added to the remaining amount.
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