They are also known as compensatory interest and refers to the interest paid for the credit that was requested that provided the money by returning something extra, that is, the interest you will pay.
Compensatory interest rate
Before requesting any type of credit, it is essential to review the interest rate offered by the financial institution, as this will determine how much you will pay for that credit and whether or not it suits you.
Punctual interest rate
It is also known as a default interest rate and occurs when the payment of the corresponding fee is not made on the agreed date. These interests are greater than the compensatory ones because it concerns the breach of the obligation. Therefore it is always advisable to keep in mind the payment dates that have been established and make the payment before or on the same day. The punitive interest will be charged only in case of delay, if you make the minimum payment of the month it is not considered a default.
The law establishes a limit for punitive interests and is that it may not exceed 50% of the compensatory interest that the financial or banking institution has agreed with the client.
Both interest rates apply to contractual obligations, that is, those that are derived from a contract. This category includes all types of credit (credit cards, personal loans, vehicle loans, mortgage loans, etc.).
Now that you know these concepts, you can choose the best option
Remember that in Lily Bart you can compare all the options offered by the market for different types of credit and choose the one that suits you (with a lower interest rate).