Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Paid-Up

What it is:

Paid-up means that all payment obligations under a contract are met.

How it works (Example):

Let's say John Doe takes out a car loan to purchase a 1985 Camaro. The loan requires 60 monthly payments of $141. John misses a few payments because he overspent on a leather jacket and some Knight Rider memorabilia. His lender calls to tell him that his loan is not paid up and late-payment fees will be assessed.

Why it Matters:

Being paid up on one's accounts is one of the pillars of having good credit. From a business perspective, failing to pay up can result in lawsuits for contract breach and can cost money in interest charges and late fees. Creditors can also report failures to maintain a paid-up status to credit reporting agencies, which will note the borrower's inability to pay reliably and lower their credit scores accordingly.