Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
A grace period is a predetermined window of time following the due date during which payment may be made without penalty. This allows an individual to pay their owed amount without incurring a late fee if they miss their deadline by a few days due to any unavoidable circumstances. However, it can only be exercised if the contract or agreement specifically includes a clause for the grace period. A delay in payment during the grace period cannot result in default or cancellation of the loan or contract. However, once the grace period is over, the contract or agreement can be terminated, incurring a penalty on the borrower or tenant.
A grace period can save both the borrower and the lender from a lot of hassles if the tenant ever misses the due date in paying their rent.
● It can be difficult for a borrower to pay rent on the first of every month as it is very likely that they are managing their finances on a paycheck-to-paycheck basis. Receiving the salary and then paying the rent on the same day can prove to be hard at times and a grace period saves that trouble on the tenant’s part.
● There can often be unforeseen circumstances when the payment can get delayed especially when transacting online. It could be some technical glitch in the server, a bank holiday or just tight finances at the tenant’s end and a grace period come in handy in these times.
● The grace period prevents the breach of the contract or agreement on the part of the individual applying for a mortgage/loan.
A grace period is a crucial tool to help a borrower in case of delayed payment, however, it is not mandatory to be added to the agreement. So it is advisable for the borrower to carefully read the agreement and make sure to get it added to the terms of the agreement. However, the grace period will no longer be valid if the buyer makes the transaction. The best part about the grace period is that it never affects the individual’s overall credit scores.
