The grace period of a loan often involves a delay or a kind of deferral regarding the payment of regular instalments that make up the agreed repayment. Although conceptually this is the priority of a grace period, there are other alternatives that lenders and borrowers can agree on.

It is common for these periods to be defined at the beginning of the life of a loan, when it is granted, as a tool to make it more attractive or to facilitate access to it for a wider range of borrowers.

Although this term is generally associated with mortgage contracts between financial institutions and individuals and companies, it is also frequently found in many other types of financial contracts. Some of these are rental contracts for housing and commercial premises or in the insurance market.