Work out contract penalty interest instantly with clear inputs, formula shown and shareable results.
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.
Simple interest
Interest = Principal x Annual rate x Days / 365
Monthly compounding
Interest = Principal x [(1 + Rate/12)^(Days/30.44) - 1]
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.
Yes. Rates that amount to a penalty rather than compensation for late payment can be reduced or struck down in many jurisdictions.
Simple, unless the contract clearly provides for compounding. Compounding without express agreement is often unenforceable.