How to calculate interest for late payment

On many occasions, and unfortunately even more so with the economic crisis, many people and companies can not cope with the payments of outstanding debts or receipts . Sooner or later, this past due amount must be paid, and for the time that has been exceeded, an extra cost has to be paid, called interest for late payment. In this article we explain how to calculate interest for late payment.

Steps to follow:


The interest for delay is that extra percentage, which the debtor must pay to meet the arrears of a debt owed to someone, apart from the payment of the fees themselves. Depending on time and interest, it can become a really high amount.


In the beginning, the interest for delay will be fixed in the contract that both parties maintain, which will be the applicable one. If it has not been determined in said contract, the applicable will be the legal interest of the money for damages, which for the year 2014 is 4 % . The default interest established by the Government for unpaid loan installments is 5% .


Once we know the applicable interest, we will have to apply the following formula, proportional to the amount and time in which the delay has existed:

  • Interest of delay = (Amount owed due) x (Time of delay, we will divide the number of days between 365) x (Interest rate of delay)


Let's put the above formula with a numerical example, to help us understand more easily how it works. Let's imagine that the amount owed is € 1, 000, the time is 120 days and the default interest is the standard, 5%.

In this case: 1000 x (120/365) x 0.05 = 16.43 € would be the default interest that the debtor should face, apart from the amount and the usual interest.


In addition, in the event that the debt is covered by the Delinquency Law, we can demand from the debtor all those costs related to the procedures to make the collection of the debt effective, such as telephone calls, letters or advice.