> For the complete documentation index, see [llms.txt](https://docs.clearpool.finance/clearpool/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.clearpool.finance/clearpool/how-it-works/credit-vaults/protocol/repayment-and-penalties.md).

# Repayment and Penalties

Repayments, Grace Periods, and Penalty Interest

**Borrower Repayments:**

* Borrowers are obligated to make repayments according to the predetermined schedule set for the Credit Vault by the borrower.
* However, this obligation only applies if there are withdrawal requests submitted within the minimum notice period.
* If no lender requests a withdrawal during the repayment cycle, the borrower does not need to make a payment at that time.

**Penalty Interest:**

* In case of a borrower missed repayment (failing to repay on the designated Repayment Date), a grace period of 5 days is granted.
* During this grace period, a significant penalty interest of 20% will accrue on the total borrowed amount.
* This penalty serves as a deterrent for late repayments and compensates the lenders for the increase in the overall risk profile for all lenders in the pool.
* The good news for lenders is that the accrued penalty interest is distributed proportionally alongside the regular interest earned.