dráttavextir

Dráttavextir are a type of interest charged on overdue payments in Iceland. The term translates roughly to "late interest" or "default interest." These are typically applied by businesses or individuals to customers or debtors who fail to meet their payment obligations by the agreed-upon deadline.

The purpose of dráttavextir is to compensate the creditor for the financial loss incurred due to the delay in payment. This loss can include the cost of capital that would have been available for use, as well as an incentive for the debtor to pay on time. The specific interest rate for dráttavextir is often determined by law, but can also be stipulated in contracts between parties.

In Iceland, the governing legislation for dráttavextir is primarily the Act on Interest and Other Charges on Overdue Payments (Lög um vexti og annars konar endurgjald vegna vangoldinna skuldabréfa og annarra slíkra greiðslna). This law sets a benchmark rate, which is typically the central bank's policy rate plus a certain percentage. Parties can agree on a higher rate, but it must remain within legal limits.

The application of dráttavextir is a common practice in commercial transactions and consumer credit in Iceland. It serves as a legal mechanism to enforce payment terms and protect creditors from financial harm caused by delayed payments.