Calculating interest on overdue money

[callander]

if the lease states - interest is calculated daily from the due date, continues until the overdue money is paid and is capitalised monthly

to calculate this do i take the monthly rent and times by the interest rate stated in the lease (to give a daily rate) and then times by how many days a payment is late??

 

[The Y-man]

to calculate this do i take the monthly rent and times by the interest rate stated in the lease ....

... x 12 / 365 to get the daily rate?

Then for every month it is late, the amount needs to be capitalised into the total amount owing for the puposes of calculation....

Cheers,

The Y-man

 

[callander]

Thanks for the help. one more questions, would GST be applicable on the penalty interest?

 

[The Y-man]

Is this a commercial lease?

Cheers,

The Y-man

 

[callander]

yes commercial lease

 

[michaelg]

Hi,

Is it an annual interest rate or something else?

e.g. if the penalty interest was 8% per annum, then the daily rate would be;

annual rate / 365

Then I assume interest is calculated on the amount owing, in this case the missing lease payment

if the monthly rent was $2000, then penalty interest might be calculated as;

$2000 x daily interest rate

If you fail to pay the lease payment for 1 month, then on the day of the next monthly period, the amount on which penalty interest is calculated on is incremented to equal;

$2000 + sum total of all the daily interest charges for the past month.

This new total is what interest would be calculated on.

In essence, the daily interest charges are applied (compounded) each month onto the outstanding balance.

And if you're late two months, then it would be

lease + interest + lease + interest

Regards
Michael

 

[callander]

Sorry to question again, i think that i have gone through the calculations too many times and confused myself.

currently penalty interest rate is 13% per annum.
Current monthly rent is $1083.33 plus gst

do i take the 13% and divide by 365 to get the daily rate = 0.03561
if i then take the monthly rent $1083.33 X 0.03561 = $38.58 (rounded) and this the daily penalty interest charge for every day the tenant is late in paying?

 

[boods99]

Sorry to question again, i think that i have gone through the calculations too many times and confused myself.

currently penalty interest rate is 13% per annum.
Current monthly rent is $1083.33 plus gst

do i take the 13% and divide by 365 to get the daily rate = 0.03561
if i then take the monthly rent $1083.33 X 0.03561 = $38.58 (rounded) and this the daily penalty interest charge for every day the tenant is late in paying?

Unfortunately, it would only be 38.58 cents per day...


Boods