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LSDefine
Simple English definitions for legal terms
grace period
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A quick definition of grace period:
A grace period is a time when you don't have to pay back money you owe or you won't be charged extra fees. For example, if you have a credit card, you might have a grace period of 20 to 30 days before you have to pay interest on what you bought. This means if you pay your bill in full within that time, you won't have to pay extra. Some student loans also have a grace period after you graduate, so you don't have to start paying back your loan right away. A grace period is also included in some mortgage and insurance contracts, which means you won't be charged late fees or have your loan or contract cancelled if you don't pay on time during that time. But if you don't pay by the end of the grace period, you might have to pay extra fees or your credit might be affected.
A more thorough explanation:
A grace period is a period of time during which a borrower is not required to make payments on a debt or will not be charged a fee. This period is usually included in loan or contract agreements and is meant to give the borrower some time to make payments without incurring any penalties.
- Credit cards: Most credit cards offer a grace period of 20 to 30 days before interest is charged on purchases. This means that if you pay your bill in full within the grace period, you won't owe any interest.
- Student loans: Many student loans offer a grace period for at least a few months after graduation, so new graduates don't have to start repaying their loans right away.
- Mortgages: Mortgage contracts often include a grace period during which no late fees will be charged, and the delay will not result in default or cancellation of the loan.
- Insurance: Insurance contracts may also include a grace period during which the policyholder can make a payment without incurring any penalties.
These examples illustrate how a grace period can be beneficial for borrowers. It gives them some time to make payments without incurring any penalties, which can be especially helpful if they are experiencing financial difficulties or unexpected expenses.