Alabama late fee law

6%per year

Attaches to the debt by operation of law when you agreed no rate, so it accrues before any lawsuit and can be stated on a demand letter.

Except as otherwise provided by law, the maximum rate of interest absent a written contract is 6% per annum ($6 upon $100 for one year); by written contract the general ceiling is 8% per annum. The 6% rate operates as the default legal rate where no rate is agreed. Justia also lists Ala. Code § 8-8-8 (interest accrues on breach of contract), commonly used to run interest on overdue money obligations from default; verify its text with counsel. Statute text verified on two reputable secondary sources (onecle full text, Justia); official ALISON site was unreachable.

The general written-contract ceiling is 8% (§ 8-8-1), but Ala. Code § 8-8-5 removes rate limits entirely for loans, forbearances, and credit sales with an original principal balance of $2,000 or more, for any person, corporation, trust, partnership, or association - parties may agree to any rate, and the usury defense is waived (subject to unconscionability doctrine, including the Mini-Code for consumer transactions). Most B2B trade-credit arrangements therefore face no effective usury cap if the agreed balance is ≥ $2,000.

public+private-construction

Private construction: Alabama Prompt Pay Act (Ala. Code §§ 8-29-1 to 8-29-8) - late payments to contractors/subcontractors accrue interest at 1% per month (12% per annum) on the unpaid balance (§ 8-29-3(d)); excludes residential homebuilding, projects of 16 or fewer residential units, and contracts under $10,000. Public/state contracts: Ala. Code § 41-16-3 requires timely payment when the State is a party; interest on late payments is at the rate currently charged by the Alabama Department of Revenue (no fixed statutory percentage).

No Alabama statute specifically regulating flat late fees on commercial (non-construction) invoices was found; default rule applies - an agreed late fee is enforceable if it is a reasonable liquidated damage rather than a penalty. Because § 8-8-5 lifts rate caps on obligations ≥ $2,000, recharacterization of a late charge as usurious interest is rarely a risk in B2B deals; for small balances (<$2,000) the 6%/8% caps of § 8-8-1 could matter.