If a person or institution responsible for repaying a loan or making an interest payment fails to meet that obligation on time, that person or institution is in default.
If you are default, you may lose any property that you put up as collateral to get the loan. For example, if you fail to repay your car loan, your lender may repossess the car.
Defaulting has a negative impact on your credit history and your credit score, which generally makes it difficult to borrow again in the future. In fact, failure to pay on time is the single most important contributor to a poor credit history.
A bond issuer who defaults may not pay interest when it comes due or repay the principal at maturity, or both.
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- Collateral, Foreclosure, Lien, Lienholder, Loan, Secured loan
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