Economics
Default interest
Also known as: default rate, penalty interest
status: draft
An additional interest rate, typically 2-3% above the standard rate, charged when a borrower is in default or when specified events of default have occurred and are continuing.
What to watch
Default interest accrues automatically in most facility documents once a default is declared. Confirm when it starts (declaration vs. occurrence), whether it compounds, and whether waiver of the default also waives accrued default interest.
Referenced in 50 topics
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