If A Late Fee Is 10% Per Annum, How Is That Calculated On A Monthly Basis?

Our condo assoc. Bylaws indicate we can charge 10% per annum for late fees. The fees are $140 per month. If the 1st unpaid month late fee is $14 making the match $144. If not paid the next month do we add $144 +$140 = 284 x 10% = 28.40 - The owner very soon owes $312.40? Is this the correct way to calculate this?


Answer:
Total fee per month = $140
Total tax per annum =140*12=$1680
If the late fee charge per annum is 10% then we will apply this percentage on per annum allowance =1680*10/100=$168
per month late fee charge percentage = 10/12=0.83 % per month
per month late allowance charges=140*0.83/100=$1.162
now for 2 months the total amount =1.162+1.162=&2.324
owner now ows total amount which is equal to =140+140=280+2.324=$282.32
So the owner ows $282.32 not $312.40

Comment: I'm sorry, but this makes NO sense. You are suggesting that if they can charge 10% per annum, afterwards over the course of two months they are only making $2.32 ($282.32 - ($140 * 2)) in late fees. That is undoubtedly not the case. The actual answer is that at 10% per annum, you can add $14 in belated fees each month ($140 * .10). You cannot compound it -- so after month one, even though they now owe $154 ($140 + 14), you can only tack on another $14 to the subsequent $140 they owe -- thus they would owe $308.
Answer: What we do at my condo is take 10% (.10) and divide that by 12.. = .007977.
Each month you take whatever is tardy (we do >90) and tack on .007977.
Each month that small amount is compounded.

EX: 1,250 past due x 0.007977 = 9.98
The next month, if that is still not rewarded, and the next month's fees are added to the >90,
1250+300=1550.
Add in the interest from last month, 1550+9.98 = 1559.98
Calculate this month's interest on that total.
1559.98 x 0.007977 = 12.45

If you clutch 0.007977 and multiply it by 12 you will see that equals .10, makes more sense than any of the other answers.

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