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  1. #1
    Join Date
    Jan 2012
    Posts
    4

    Question Excessive Late Fee Charges

    My question involves real estate located in the State of: Missouri

    We have a private individual that is charging late fees, which contract only says 5% late fee for monthly payment. This guy is charging late fee on top of late fee and on the total balance due that includes the late fees. We are only talking about 3 payments past due, which I can now pay. But I'm not sending the money to him until I know he can't charge that much late fees. Late fees actually only total $61.25, but he has got them up to $189.63. Can he legally charge late fees like that?

    Please advise

    Thanks

  2. #2
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Excessive Late Fee Charges

    without reading exactly how the penalty fee is calculated based on the written contract, I cannot say whether the creditors calculations are correct or if your calculations are correct.

  3. #3
    Join Date
    Jan 2012
    Posts
    4

    Question Re: Excessive Late Fee Charges

    Thank you for responding.....here is what the contract says about late fees....word for word.

    "If any monthly installment is more than 10 days late, the note holder may charge a late penalty. The late charge will be 5% of the late payment."

    So, I take this to mean a late fee only on the Payment itself, NOT the entire balance due plus the original payment and the late fee....

    Example of what he's doing....

    $245.00 payment
    12.25 late fee
    257.25 Total

    257.25 previous balance
    245.00 payment
    502.25 total
    25.13 5% late fee on total balance
    527.28 total with late fee

    527.28 previous balance
    245.00 payment due
    772.28 total due
    38.61 5% late fee on total bal due
    810.89 Total due with late fee


    It should be only be $12.25 late fee per month per payment, shouldn't it. Banks and credit cards only charge late fee on the payment only per month.

    I hope this is clear as to what he's really doing....

    Thanks

  4. #4
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Excessive Late Fee Charges

    I read it the same as you: the fee is a percentage of the payment not made and it does not allow for compounding. The reason I would suggest it does not consider compounding is, after some point, the creditor has other actions available to them such as suing you for breach of contract or some such action.

    It should be only be $12.25 late fee per month per payment, shouldn't it. Banks and credit cards only charge late fee on the payment only per month.
    that varies with their contracts but what I have typically seen is they charge a late fee but since their interest is generally compound interest calculated, there is a built in increase in the amount owed. It is kind of a hidden penalty fee.

  5. #5
    Join Date
    Jan 2012
    Posts
    4

    Default Re: Excessive Late Fee Charges

    Thank you.....I knew he wasn't doing it right.....he is getting to us....we've been with him for 14 years.....and I guess I finally woke up to the fact that he's not above board....so I am looking for someone else to finance just the land only....which in our area is hard to find....not everyone does it....

    Thanks so much for your help.....

  6. #6
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Excessive Late Fee Charges

    What sort of real estate sale or transaction are we talking about?

  7. #7
    Join Date
    Jan 2012
    Posts
    4

    Default Re: Excessive Late Fee Charges

    This guy financed our land for us....a private individual....rather than going through a bank.....I do have him caught up now.....so now...I'm looking to find a finance company that will finance land only.....I have found one place that I'm checking with Monday 16th to see if we can go with them....

    Plr4648

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