What is Paid-Up?

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

How Does Paid-Up Work?

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 Does Paid-Up Matter?

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.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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