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Can Lender Hold Late Fees & Charge Interest?

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A customer I know has been running past due about 30 days... They recently paid current owing a 1/2 payment for May and Junes full payment. But, somehow had over $400.00 in late fees, when the late fee per month is only around $47.00 per their promissory note and payment stub? Can a lender hold late fee's like that and charge interest on them? With only owing May and June there should have been only 2 late fees?

Not sure what your question really might be. Whether you can add late charges to the balance and what order you have to apply the payments received is a matter of State law and your loan contract. Assessing late charges for failure to only pay the late charges however is pyramiding late charges, which is not legal.

First published on 09/02/2018

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