When you owe money, interest might be charged if you don’t pay by a deadline. Interest can also be the amount of money a lender or financial institution receives for lending out money. Interest is added to the original amount due.
Common situations where interest might be charged:
- You took out a loan
- You signed a payment plan for a car or other purchase
- You missed a bill or credit card payment, or paid late
- You didn’t pay your strata fees or special levy amount, or paid late
Can I ask the CRT to order someone to pay interest?
What is contractual interest?
Contractual interest is an interest rate stated in a contract or agreement. The contract or agreement will say whether it is simple or compound interest.
For example, your loan agreement might say 21% interest will be charged for all late or missed payments, compounded daily.
Strata bylaws may state an interest rate that will be charged if an owner doesn’t pay their strata fees or special levy on time.
What is court ordered interest?
In most cases where there is no contract, agreement or bylaw that states the rate of interest, the CRT will calculate interest using the rate set by the BC Supreme Court, unless the applicant said they don’t want to claim interest.
The BC Supreme Court updates the court ordered interest rate every 6 months. See their latest interest rate table. If the CRT awards court ordered interest in a decision, it’s based on the “pre-judgment” rate of interest in that table.
How is interest calculated?
It depends on whether it’s simple or compound interest.
Simple interest is the most common method used in CRT claims. Here’s an example of simple interest.
- The original amount due is $1,000. The interest rate is 15% and payment was 200 days late:
($1,000 × 0.15 × 200) ÷ 365 days in a year = $82.19 interest