Michigan late fee law

5%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.

The legal rate of interest is 5% per annum ('$5.00 upon $100.00 for a year') where no rate is agreed; parties may stipulate in writing for a rate not exceeding 7% per annum. Michigan case law holds accrued contractual interest above the statutory rate is not collectible absent a written contract provision. Verified via FindLaw statute mirror plus corroborating sources; legislature.mi.gov was network-blocked from this environment.

General written-contract ceiling is 7% (MCL 438.31). Key B2B carve-out: MCL 438.61 - regulated depository/institutional lenders (banks, savings banks, S&Ls, credit unions, insurers, finance subsidiaries of manufacturers) may agree in writing with a 'business entity' (corporation, trust, estate, partnership, cooperative, association, or a natural person giving a sworn business-purpose statement) to ANY rate of interest; other persons extending credit to business entities may agree in writing up to the rate allowed under 1968 PA 259 (the criminal usury act, 25% per annum ceiling).

public

Michigan's prompt payment act (1980 PA 524, MCL 125.1561 et seq.) covers public works construction contracts of $30,000+ (excluding MDOT, school, and state housing authority projects): payment due within 30 days of invoice approval; an unpaid contractor 'may include reasonable interest on amounts past due in the next request for payment' - the statute does not fix a numeric rate. No general prompt-payment statute for private commercial or private construction invoices was found.

Flat late fees on commercial invoices follow the general liquidated-damages/penalty doctrine (reasonable, agreed fees enforceable). Caution: without a signed writing, recoverable interest on overdue accounts is capped at the 5% statutory rate; a late charge recharacterized as interest can exceed the 7% cap only if a MCL 438.61 business-entity exemption (or the 25% criminal-usury ceiling for business credit) applies.