FLAT AMOUNT charges a flat (fixed amount) fee when an account becomes overdue.
For example, if the FLAT AMOUNT late fee is set at $25, and the account is $900 overdue, then the late fee assessed will be $25. For each month the account is overdue, regardless of the amount, the late fee assessed will be $25.
PERCENT OF PAYMENT DUE charges a late fee based on a percentage of the part of a payment due that remains to be paid.
For example, if the PERCENT OF PAYMENT DUE late fee is set as 10%, and if only $90 of a $200 standard payment is due, then the late fee will be $9 (10% of 90).
If $3000 on a loan with a standard payment of $200 is due, the late fee will be $20 (10% of 200). This is because the computed late fee is based only on the payment due for that month -- not the accumulated due amount.
If the stated monthly payment is $300 and account is delinquent for 3 months ($900), then every month the late fee is computed only on the amount due for that month ($300 or part of $300) -- not on $900.
PERCENTAGE OF STANDARD PAYMENT charges a late fee based on the standard monthly payment, regardless of the current amount due.
For example, if you set 10% as the PERCENTAGE OF STANDARD PAYMENT late fee, the standard payment amount was $500, and the account was due for $2000, then the late fee will be $50 (10% of 500). In other words, every month the system computes the late fee using monthly standard payment amount ($500), irrespective of the amount paid by the customer.
If the customer pays $400 out of $500, the system still computes the late fee using $500, and not on $100.
FLAT AMOUNT PYRAMID LAW prevents the pyramiding of “flat” late fees. If an account is overdue, then the system assesses a flat (fixed amount) late fee. However, if the standard payment is made the following month, then a new late charge will not be created, even if the payment made does not fulfill the current amount due.
For example, if a customer is assessed a late fee of $25 for 1/2005, and makes his $200 standard payment in 2/2005, that person cannot be assessed a new $25 late fee for 2/2005 (even though his payment only fulfilled the amount owed for 1/2005).
If a customer makes a payment of just $199 in 1/2005 (an amount that does not fulfill the standard payment), then the customer could also be assessed a $25 late fee for 2/2005.
If the customer makes a payment of $199 in 2/2005 (an amount that does not fulfill the standard payment), then the customer could be assessed a late fee for 2/2005.
PERCENTAGE OF PAYMENT DUE PYRAMID LAW prevents the pyramiding of “percentage of payment due” late fees. If an account is overdue, then the system assesses a fee based on what part of a payment remains to be paid. However, if the standard payment is made the following month, then the system will not create a new late charge, even if the payment made does not fulfill the current amount due.
For example, if the PERCENTAGE OF PAYMENT DUE PYRAMID LAW late fee is set as 10%, and if only $90 of a $200 standard payment was due, then the late fee would be $9.
If $3000 on a loan with a standard payment of $200 was due, the late fee would be $20. However, if a customer was assessed a late fee of $9 for 1/2005, and makes his $200 standard payment in 2/2005, then that person cannot be assessed a new late fee for 2/2005 (even though his payment only fulfilled the amount owed for 1/2005).
If the customer makes a payment of $199 in 2/2005 (an amount that does not fulfill the standard payment), then the individual could be assessed a late fee for 2/2005.
Note
The system computes the late fee based on the payment due for only that month and not the accumulated due amounts.
If the stated monthly payment is $300 and account is delinquent for 3 months ($900), then the system computes the late fee every month with the amount due for that month ($300 or part of $300) and not on $900.
PERCENTAGE OF STANDARD PAYMENT PYRAMID LAW late fee prevents the pyramiding of “percentage of standard payment” late fees. If an account becomes overdue, then the system assesses a fee based on the standard monthly payment, regardless of the current amount due. However, if the standard payment is made the following month, then the system will not create a new late charge, even if the payment made does not fulfill the current amount due.
For example, if the PERCENTAGE OF STANDARD PAYMENT PYRAMID LAW late fee is set as 10%, and the standard payment is $200, then $20 (10% of 200) is owed. If only $90 of a $200 standard payment was due, then the late fee would still be $20.
If $3000 on a loan with a standard payment of $200 is due, the late fee will be $20, since the fee is calculated based on the payment due -- not the total outstanding amount due.
However, if a customer is assessed a late fee of $20 for 1/2005, and makes the $200 standard payment in 2/2005, that person cannot be assessed a new late fee for 2/2005, even though the payment only fulfills the amount owed for 1/2005. If the customer makes a payment of $199 in 2/2005 (an amount that does not fulfill the standard payment), then the system could assess a late fee for 2/2005.