• The grace period is an agreed period during which the borrower does not have to pay the lender interest or the principal amount of the loan.
  • Depending on the loan, interest may accrue during the grace period, which means that interest is added to the amount due at the end of the grace period.
  • Callable securities may also have a grace period, that is, the time during which the issuer can buy them back from the investor at a predetermined price before maturity.