Introduction to Penalty Interest Calculation

This user guide describes the calculation of the penalty interest charge, imposed by a bank to its borrowers, if the installments are not paid according to the repayment terms entered between borrower and lender at the time of initiation of the lending arrangement.

In the sections below, the user can find out more information about the applicability of the penalty interest rate, in the event of a default, with the added functionality of determining the higher of the penalty interest rate or the initial contracted rate of the loan, in order to apply the higher rate for the calculation of penalty interest.