|
What Is A Loan Default
What is Loan Default?
A loan default occurs when you fail to make a payment on time after an agreement has been reached between the lender and the borrower. It also occurs when the borrower does not comply with any other agreement made on the promissory note. This becomes a black mark on your credit history and can adversely affect your future credits and interest rates. Not only that but the creditor could assume you are not willing to repay the loan and could insinuate action against you.
Loan default is essentially of two basic types. The first and the most common type occurs when the debtor defaults on a payment of interest or principle. This might be because the debtor is either unable or unwilling to repay the debt. The second type of default occurs when the debtor violates any of the agreements made on the promissory not either purposely or unintentionally.
For example the debtor and the creditor might have made certain agreements that prevent the debtor from selling property or particular stocks. Despite the agreement if the debtor decides to go ahead and make the sale, it would be treated as a violation of the agreement and the creditor has the right to take action against the debtor.
Sometimes loan defaults are also caused by certain countries that take loans from other countries or international banks. However a country cannot declare bankruptcy and therefore defaults caused by them do not have serious implications. Of course, this could affect the economy. However, in most cases the country renegotiates with the creditor country or financial institution to come up with an agreement that mutually beneficial.
In Canada the most common type of loan default happens mostly in the case of student loans. If you have defaulted on your loan, not only will your credit history be affected but it could also have several others serious consequences. Your interest rates could be increased, you could loose future returns on your tax, loose future financial assistance for your education and even face legal action.
If your loan default on your student loan as beyond your control and if you can prove that, then your future financial assistance will not be adversely affect and you could be excuse. However you would have to spend the next few months trying to repay the loan and proving that you genuinely tried. The National Student Loans Centre might also require you to fulfill other eligibility reinstatement criteria. In Canada if you do not pay off your student loan within a period of ten years, you will not be able to get any further assistance for about thirteen years after that.
Loan defaults are bad for the economy and bad for you. The give you a bad name and make all future credits very difficult. You could also have legal action taken against you. Hence it is always better to make your payments on time no matter how difficult it may seem. This will ensure that you have a great future!
A loan default occurs when you fail to make a payment on time after an agreement has been reached between the lender and the borrower. It also occurs when the borrower does not comply with any other agreement made on the promissory note. This becomes a black mark on your credit history and can adversely affect your future credits and interest rates. Not only that but the creditor could assume you are not willing to repay the loan and could insinuate action against you.
Loan default is essentially of two basic types. The first and the most common type occurs when the debtor defaults on a payment of interest or principle. This might be because the debtor is either unable or unwilling to repay the debt. The second type of default occurs when the debtor violates any of the agreements made on the promissory not either purposely or unintentionally.
For example the debtor and the creditor might have made certain agreements that prevent the debtor from selling property or particular stocks. Despite the agreement if the debtor decides to go ahead and make the sale, it would be treated as a violation of the agreement and the creditor has the right to take action against the debtor.
Sometimes loan defaults are also caused by certain countries that take loans from other countries or international banks. However a country cannot declare bankruptcy and therefore defaults caused by them do not have serious implications. Of course, this could affect the economy. However, in most cases the country renegotiates with the creditor country or financial institution to come up with an agreement that mutually beneficial.
In Canada the most common type of loan default happens mostly in the case of student loans. If you have defaulted on your loan, not only will your credit history be affected but it could also have several others serious consequences. Your interest rates could be increased, you could loose future returns on your tax, loose future financial assistance for your education and even face legal action.
If your loan default on your student loan as beyond your control and if you can prove that, then your future financial assistance will not be adversely affect and you could be excuse. However you would have to spend the next few months trying to repay the loan and proving that you genuinely tried. The National Student Loans Centre might also require you to fulfill other eligibility reinstatement criteria. In Canada if you do not pay off your student loan within a period of ten years, you will not be able to get any further assistance for about thirteen years after that.
Loan defaults are bad for the economy and bad for you. The give you a bad name and make all future credits very difficult. You could also have legal action taken against you. Hence it is always better to make your payments on time no matter how difficult it may seem. This will ensure that you have a great future!
|
|