The formula to calculate the interest due on late rent payments is:
ID=RA×(IR100×365)×DL
Where:
Late rent interest is the additional money owed by a tenant when rent payments are not made on time. It is calculated based on the agreed-upon annual interest rate in the lease or rental agreement. This interest compensates the landlord for the delay in payment and is typically calculated on a daily basis from the day the rent was due until the day it is paid.
Let's assume the following values for two examples:
Using the formula:
ID=1000×(5100×365)×10≈1.37$
The Interest Due is approximately $1.37.
Using the formula:
ID=1500×(7100×365)×15≈4.32$
The Interest Due is approximately $4.32.