What does a default loan mean Meaning and Definition

Pronunciation

/ˈdɪfɔlt ˈloʊn/ 🔊

Part of Speech

Noun

Definition

A situation in which a borrower fails to meet the terms of a loan, leading to a default of the loan agreement, which can result in legal action and damage to the borrower’s credit score.

Examples

• The borrower’s failure to make payments led to a default on the loan.
• If you default on your student loan, it can affect your credit score.

Synonyms

• Default payment
• Loan delinquency

Antonyms

• Loan repayment
• Timely payment

Additional Information

A default loan can have serious consequences for the borrower, including damage to their credit score, legal action, and even repossession of assets. It is essential for borrowers to understand the terms of their loan agreement and make timely payments to avoid defaulting on the loan.

In some cases, lenders may offer assistance to borrowers who are at risk of defaulting, such as temporary payment deferment or loan modification. However, it is crucial for borrowers to communicate with their lenders and seek professional advice to explore available options.

Etymology

The term “default loan” originated from the Latin word “defaultare,” meaning “to fail” or “to neglect.” It has been used in the context of loan agreements since the 15th century.

Usage Notes

When using the term “default loan,” it is essential to understand the context and the consequences of defaulting on a loan. It is commonly used in financial and legal contexts to describe a borrower’s failure to meet their loan obligations.

Cultural References

The concept of defaulting on a loan has been depicted in various movies and TV shows, such as “The Big Short” and “Billions,” highlighting the consequences of reckless borrowing and lending practices.

Idiomatic Expressions or Phrases

• “Default on a loan” – to fail to meet the terms of a loan agreement.

Related Words or Phrases

• Loan delinquency
• Credit score
• Loan agreement

Collocations

• Default on a loan payment
• Default loan rate

Frequency of Use

The term “default loan” is commonly used in financial and legal contexts, particularly in discussions about loan agreements, credit scores, and borrower responsibilities.

Common Misspellings

• Defalt loan
• Deffault loan