Contract Penalty Interest Calculator

Work out contract penalty interest instantly with clear inputs, formula shown and shareable results.

About Contract Penalty Interest Calculator

Contractual penalty interest accrues on the overdue principal at the agreed rate, on either a simple or compounding basis depending on the clause. The daily accrual figure is the most useful negotiating number, because it prices every further day of delay.

Formulas

Simple interest

Interest = Principal x Annual rate x Days / 365

Monthly compounding

Interest = Principal x [(1 + Rate/12)^(Days/30.44) - 1]

Worked example

With the default values below, Contract Penalty Interest Calculator returns Penalty interest payable of $70,273.97. Change any input above and every figure here is recalculated in your browser.

Inputs used

Overdue principal: 1,500,000
Contractual interest rate: 18
Days overdue: 95
Interest basisone of Simple interest, Monthly compounding: Simple interest

Results

Penalty interest payable: $70,273.97
Total now due: $1,570,273.97
Interest accruing per day: $739.73
Interest as % of principal: 4.68%

Step by step

1Values used
2Simple interest
3Monthly compounding
4Penalty interest payable= 70,273.97
5Total now due= 1,570,273.97
6Interest accruing per day= 739.73
7Interest as % of principal= 4.68

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
Indicative estimate only. Fees, entitlements, limits and formulas vary by jurisdiction, statute, policy wording and the facts of the case. This is not legal, tax, insurance or financial advice — confirm with a qualified professional or the relevant authority.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Indicative estimate only. Fees, entitlements, limits and formulas vary by jurisdiction, statute, policy wording and the facts of the case. This is not legal, tax, insurance or financial advice — confirm with a qualified professional or the relevant authority.

Frequently Asked Questions

Can a court reduce contractual interest?

Yes. Rates that amount to a penalty rather than compensation for late payment can be reduced or struck down in many jurisdictions.

Simple or compound by default?

Simple, unless the contract clearly provides for compounding. Compounding without express agreement is often unenforceable.