Default (Loan Default)
Failure to make required payments on a loan or to meet its conditions.
Detailed Description
Default (Loan Default)
What is a loan default?
A loan default occurs when a borrower fails to meet the legal obligations of a loan agreement, typically by not making required payments on time.
What are common causes of loan default?
Common causes include financial hardship, poor financial planning, unexpected expenses, and changes in interest rates.
What are the types of loan default?
The two main types are technical default, which involves violating non-payment terms, and monetary default, which refers to failing to make scheduled payments.
What are the consequences of defaulting on a loan?
Consequences can include late fees, increased interest rates, collection actions, and potentially foreclosure on secured loans.
How can borrowers prevent loan default?
Borrowers can prevent default by budgeting, establishing an emergency fund, and maintaining communication with lenders.