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How is the default interest calculated?

In a project’s payment plan, interests are compensation for the money that is lent for a period of time. When an installment is not paid on its scheduled date, the principal is lent for a time longer than it was supposed to. Because of this, there is a contractually stated arrears interest percentage of 4% per year, which is a penalization for the borrower (the promoter) and an extra compensation for the lender (the investors). The arrears interest is charged plus the project's interest rate for each day of arrears.

How it happens at Goparity:

1. When a project promoter delays an installment payment, the days of arrears start counting. 

2. Once the delayed payment has been settled, the days of arrears stop counting, and the investors are due to receive the default interest. It is calculated over the owed principal reimbursement and interest, at a rate of 4% a year plus the project's regular interest rate, per day of delay.

Note: our platform can only perform payments with a minimum of 0.01€. That means that it is possible, depending on the installment amount or the number of days of default, that the arrears interest does not reach that minimum, and therefore, no payment is performed.

The investors are notified by email when default interest is paid by a project. You can manage your notifications in your Settings.