A grace period is a set duration of time after a deadline during which a borrower or debtor can perform an obligation without facing any penalties or being considered in default.
A late charge or late fee is a penalty that businesses or lenders impose on customers who fail to make a payment by the specified due date, including any applicable grace period. These fees can be quite substantial, sometimes up to 5% of the regular payment amount, and are meant to incentivize timely payments.
A Notice of Default is a formal notification sent to a borrower or a tenant indicating that they have failed to make the required payments or comply with the terms of a loan or lease agreement. It often includes details on the grace period provided to cure the default and the penalties that will be applied if the default is not resolved.
