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Interest on unpaid invoices in Michigan: 5% a year if no rate was agreed; the most you can set depends on the deal

By Yossi Grunwald, founder of Workeey · Updated

In Michigan, 5% a year if no rate was agreed; the most you can set depends on the deal. Read from Michigan's own statutes, agencies and courts, checked November 6, 2026, with every answer quoted below, and a late fee calculator.

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Michigan's rate when no rate was agreed

5% a year. MCL 438.31: the interest of money is 5% a year where nothing else is agreed. Once a money judgment is entered, MCL 600.6013(8) adds interest from the complaint's filing at 1% + the average 5-year Treasury note auction rate, reset every January 1 and July 1 as certified by the State Treasurer.

Worth knowing: interest on a court judgment. Judgment interest: 1% + average 5-year Treasury note auction rate for the prior 6 months, reset Jan 1 and Jul 1 (MCL 600.6013(8)).

  • “The interest of money shall be at the rate of $5.00 upon $100.00 for a year, and at the same rate for a greater or less sum, and for a longer or shorter time” — MCL 438.31, read November 6, 2026
  • “for complaints filed on or after January 1, 1987, interest on a money judgment recovered in a civil action is calculated at 6-month intervals from the date of filing the complaint at a rate of interest equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer” — MCL 600.6013(8), read November 6, 2026
  • “The rate under this subsection shall not exceed 13% per year compounded annually.” — MCL 600.6013(7), read November 6, 2026

The most you can set in Michigan

For a homeowner: It depends: see MCL 438.31. The parties may stipulate in writing for any rate of interest not exceeding 7% per annum, but the 7% does not apply to any time price differential which may be charged upon sales of goods or services on credit (MCL 438.31).

For a business customer: It depends: see MCL 438.61. Other creditors any written rate not exceeding the rate allowed under 1968 PA 259. A business entity includes a corporation, partnership, association, etc., or a natural person who gives a sworn written statement of the business purpose.

  • “except that in all cases it shall be lawful for the parties to stipulate in writing for the payment of any rate of interest, not exceeding 7% per annum.” — MCL 438.31, read November 6, 2026
  • “nor shall it apply to any time price differential which may be charged upon sales of goods or services on credit.” — MCL 438.31, read November 6, 2026
  • “any rate of interest not exceeding the rate allowed under Act No. 259 of the Public Acts of 1968” — MCL 438.61(3), read November 6, 2026
  • “"Business entity" means a corporation, trust, estate, partnership, cooperative, or association or a natural person who furnishes to the extender of the credit a sworn statement in writing specifying the type of business and business purpose for which the proceeds of the loan or other extension of credit will be used.” — MCL 438.61(1), read November 6, 2026

Late fees in Michigan

What the text says: Retail installment contracts / retail charge agreements: if the contract provides, a delinquency and collection charge on an installment in default more than 10 days — the section sets no dollar or percent cap. Retail installment transactions under the Retail Installment Sales Act: goods or services for personal, family or household use bought under a contract with a time price differential, payable in 1 or more installments. It depends: see MCL 445.859.

  • “The holder of an installment contract or retail charge agreement, or retail charge agreement including a contract subject to section 23, if it so provides, may collect a delinquency and collection charge on each installment in default for a period of more than 10 days. A delinquency and collection charge is not a liquidated damage.” — MCL 445.859, read November 6, 2026
  • “"Services" means work, labor, advice, counseling, or instruction if purchased primarily for personal, family, or household use and not for commercial or business use.” — MCL 445.852, read November 6, 2026
  • “"Retail installment transaction" means any transaction in which a retail buyer purchases goods or services from a retail seller pursuant to a retail installment contract or a retail charge agreement that provides for a time price differential and under which the buyer agrees to pay the unpaid balance in 1 or more installments.” — MCL 445.852, read November 6, 2026

Does Michigan want it agreed in advance?

Agreed in advance: yes, in the cases below. The RISA delinquency charge applies only 'if it so provides' (MCL 445.859).

  • “it shall be lawful for the parties to stipulate in writing for the payment of any rate of interest, not exceeding 7% per annum.” — MCL 438.31, read November 6, 2026

Homeowners and businesses in Michigan

Homeowner credit sale with a time price differential: Retail Installment Sales Act governs (delinquency charge only if in the contract, after 10 days); business customer: MCL 438.61 business-entity rules. Under the Retail Installment Sales Act, "services" means work, labor, advice, counseling, or instruction if purchased primarily for personal, family, or household use and not for commercial or business use (MCL 445.852).

  • “if purchased primarily for personal, family, or household use and not for commercial or business use.” — MCL 445.852, read November 6, 2026

Prompt payment on private construction in Michigan

Not found in our check for Michigan.

Work out a late charge in Michigan

Starts at Michigan's 5%, the rate when none was agreed, not a maximum.

Days since the due date
The rate or fee your terms set

$4.93 late charge

Days late
30
New total
$1,204.93

$1,200.00 × 5% a year × 30 days ÷ 365 = $4.93

What was not checked for Michigan

  • Michigan's current judgment interest figure could not be read: the state's pages refused automated reading.
  • The most a seller may add under Michigan's Retail Installment Sales Act (its time price differential) was not read.
  • The 1968 act whose rate MCL 438.61(3) points to (1968 PA 259) was not read.
  • Bills on private construction prompt payment in Michigan's 2025–26 session were not checked.

Check Michigan's own text

Before you charge: read MCL 438.31 and the other Michigan texts quoted on this page, or ask a lawyer. As of November 6, 2026.

This is a plain-words summary of each state's own laws as of November 6, 2026, not legal advice. Rules have exceptions. Check the state's own text, linked on every state's page, or a lawyer before you charge a late fee or interest.

Compare Michigan with every state's answer, or with its neighbours just below.

Next door to Michigan

  • Indiana: 8% if none agreed, depends by agreement
  • Ohio: floats if none agreed, 8% for homes
  • Wisconsin: 5% if none agreed, depends by agreement

Official sources for Michigan

Every state in one file: Excel and CSV downloads

Where our data comes from

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