If A Late Fee Is 10% Per Annum, How Is That Calculated On A Monthly Basis?
Our condo assoc. Bylaws indicate we can charge 10% per annum for late fees. The fees are $140 per month. If the 1st unpaid month late fee is $14 making the balance $144. If not paid the next month do we add $144 +$140 = 284 x 10% = 28.40 - The owner now owes $312.40????? Is this the correct way to calculate this?
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Total fee per month = $140
Total fee per annum =140*12=$1680
If the late fee charge per annum is 10% then we will apply this percentage on per annum fee =1680*10/100=$168
per month late fee charge percentage = 10/12=0.83 % per month
per month late fee charges=140*0.83/100=$1.162
now for 2 months the total amount =1.162+1.162=&2.324
owner now ows total amount which is equal to =140+140=280+2.324=$282.32
So the owner ows $282.32 not $312.40
Total fee per annum =140*12=$1680
If the late fee charge per annum is 10% then we will apply this percentage on per annum fee =1680*10/100=$168
per month late fee charge percentage = 10/12=0.83 % per month
per month late fee charges=140*0.83/100=$1.162
now for 2 months the total amount =1.162+1.162=&2.324
owner now ows total amount which is equal to =140+140=280+2.324=$282.32
So the owner ows $282.32 not $312.40
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I'm sorry, but this makes NO sense. You are suggesting that if they can charge 10% per annum, then over the course of two months they are only making $2.32 ($282.32 - ($140 * 2)) in late fees. That is obviously not the case. The actual answer is that at 10% per annum, you can add $14 in late fees each month ($140 * .10). You cannot compound it -- so after month one, even though they now owe $154 ($140 + 14), you can only tack on another $14 to the next $140 they owe -- thus they would owe $308.
What we do at my condo is take 10% (.10) and divide that by 12.. = .007977.
Each month you take whatever is late (we do >90) and tack on .007977.
Each month that small amount is compounded.
EX: 1,250 past due x 0.007977 = 9.98
The next month, if that is still not paid, and the next month's fees are added to the >90,
1250+300=1550.
Add in the interest from last month, 1550+9.98 = 1559.98
Calculate this month's interest on that total.
1559.98 x 0.007977 = 12.45
If you take 0.007977 and multiply it by 12 you will see that equals .10, makes more sense than any of the other answers.
Each month you take whatever is late (we do >90) and tack on .007977.
Each month that small amount is compounded.
EX: 1,250 past due x 0.007977 = 9.98
The next month, if that is still not paid, and the next month's fees are added to the >90,
1250+300=1550.
Add in the interest from last month, 1550+9.98 = 1559.98
Calculate this month's interest on that total.
1559.98 x 0.007977 = 12.45
If you take 0.007977 and multiply it by 12 you will see that equals .10, makes more sense than any of the other answers.
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Guest
answered 8 months ago
Guest
answered 5 months ago
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