How much interest can you charge a debtor
If someone owes you money, how much interest can you charge?
If you have a contract with someone where money is or becomes due, then you are entitled to charge interest for payments not made on due date. But how much? If you have agreed on an interest rate in the contract, then the answer is to apply the rate as reflected in the contract. But what if the interest rate is not mentioned?
There is a law that prescribes the interest rate, appropriately named the Prescribed Rate of Interest Act (Act no 55 of 1975). Until 31 August 2019 that interest rate was 10.25% per annum, and with effect from 1 September 2019 the interest rate was decreased to 10% per annum.
These same rates apply even if you sue for money owed to you. You can sue for your contracted rate, or if there is no agreement reached on the interest rate payable, then the prescribed rate will prevail.
Please be aware that even if you agree on an interest rate and insert it in the contract, you can never charge an individual more than the limit set by the National Credit Act.
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This article has been compiled for information purposes only and does not constitute legal advice. Legal advice needs to be tailored to the specific needs and circumstances of the case on hand. It follows that D’Amico Incorporated cannot accept liability for any loss or damage caused to any individual or entity that has acted or omitted to act on the basis of this information.