> ## Documentation Index
> Fetch the complete documentation index at: https://docs.iris.credit/llms.txt
> Use this file to discover all available pages before exploring further.

# Maturity, grace period and overdue

> What the overdue rate and grace period in your quote mean, and what happens if you repay late.

Every quote carries two terms that only come into play if you run past your maturity date: an **overdue rate** and a **grace period**. Both are shown before you settle, so the cost of being late is something you agree to up front rather than find out afterwards.

## A loan has three phases

<Steps titleSize="p">
  <Step title="Active">
    From settlement to maturity. You pay the fixed rate you accepted, and nothing else applies.
  </Step>

  <Step title="Grace period">
    Starts at maturity. The loan stays open and nobody can force it closed, but the overdue rate is charged on top of your fixed rate for as long as it stays open. The length of the window is set in your quote.
  </Step>

  <Step title="Liquidatable">
    Once the grace period ends. Anyone can close your loan against your collateral, and takes a share of it as the incentive for doing so.
  </Step>
</Steps>

## Reading it in your quote

| Term in the quote | What it decides                                                            |
| ----------------- | -------------------------------------------------------------------------- |
| Duration          | When maturity falls                                                        |
| Overdue rate      | The extra annual rate charged on top of your fixed rate once past maturity |
| Grace period      | How long after maturity before anyone can liquidate the loan               |

The overdue rate is added to your fixed rate rather than replacing it. A loan quoted at 8% fixed with a 4% overdue rate accrues at 12% while it is past maturity.

Both terms are set by the quote, not fixed by the protocol. The overdue rate can be larger than your fixed rate, and the grace period is often short. A one-day grace period on a seven-day loan is normal, so read both before you settle.

<Note>
  The grace period gives you room to close after maturity. Once it ends, closing the loan is open to anyone.
</Note>

## Repaying early

You can close before maturity, but the fixed rate was agreed for the full term. You settle the full term's interest whichever day you close, so an early repayment returns your collateral sooner without lowering the cost of the loan.

That is worth knowing before you choose a duration. A twelve-month loan you plan to exit in three months costs twelve months of interest.

If the position has already been through a [solver liquidation](/home/user-guide/solver-backing#if-the-backing-does-fail), closing it is no longer a fixed-rate closeout. It is settling a floating-rate borrow on the venue.

## The practical rule

* Repay before maturity, or plan to close inside the grace period.
* Read both the overdue rate and the grace period in your quote before you settle. On a short loan the grace period can be a single day.
* The grace period is the last window where being late costs you nothing in collateral.