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 penalty is a sum of money that one must pay for breaking a law or violating part or all of the terms of a contract. Penalties serve to ensure compliance with legal and contractual obligations.
