Legal Question in Credit and Debt Law in California

Is it legal to charge ''retroactive interest'' on a loan?

Hello! Last year I obtained a $2K loan from ''Financial Services Company X'' for some dental work I needed to have done, and it had a one-year interest-free grace period. I specifically asked what would happen in terms of interest if I did not pay the entire balance off within the year, and I was told that I would only owe interest on any remaining balance.

I ended the grace period with only $200 to go . . . and received my final bill stating that I owed the final $200 PLUS $292-and-change in retroactive interest for the ENTIRE LOAN AMOUNT because I didn't pay it all off within a year.

I checked the contract, and yes, buried in there is a statement about charging retroactive interest if not paid in full by the end of the grace period. But before I pay them, I want to find out if it's actually legal for them to charge me for this.

Thanks in advance for any help.

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