Penal interest

In money lending, penal interest is punitive interest charged by a lender to a borrower if installments are not paid according to the loan terms. Moreover, If the installments are not received as per the repayment terms, by the end of the month, the borrower will be charged interest on the installments delayed which is called as penal interest.

Any interest charged by the lendor from borrower of funds for non compliance of repayment terms is penal interest.