A late fee is a charge a lender applies when a payment is not received by its due date or after any grace period. The amount and timing are set in the loan or credit agreement.
A late fee, also called a late charge, is assessed when a scheduled payment arrives after the due date, or after a grace period if the agreement provides one. It may be a flat amount or a percentage of the overdue payment, and applicable laws and the contract govern how much can be charged and when. A late fee is distinct from interest that continues to accrue on an unpaid balance and from a returned-payment fee, which applies when a payment fails to clear. Repeatedly missing payments can also lead to delinquency or default and may be reported, depending on the lender. The exact late-fee terms are stated in the loan or credit agreement.
