What is the term for the rate of borrowers who fail to remain current on their loans?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare yourself for the GFL Financial Literacy Test. Study with flashcards and multiple choice questions. Each question comes with helpful hints and thorough explanations to aid retention. Get ready for your exam and achieve success!

Multiple Choice

What is the term for the rate of borrowers who fail to remain current on their loans?

Explanation:
The main concept here is loan performance status. The rate that describes the share of borrowers who fail to stay current on their loans is the default rate. Default means borrowers have not met their repayment obligations, and lenders may classify the loan as nonperforming or take steps to collect or charge it off. This is distinct from the delinquency rate, which measures loans that are past due but not yet in default—those borrowers are behind on payments but haven’t defaulted yet. Interest rate and APR relate to the cost of borrowing, not to whether payments are current.

The main concept here is loan performance status. The rate that describes the share of borrowers who fail to stay current on their loans is the default rate. Default means borrowers have not met their repayment obligations, and lenders may classify the loan as nonperforming or take steps to collect or charge it off. This is distinct from the delinquency rate, which measures loans that are past due but not yet in default—those borrowers are behind on payments but haven’t defaulted yet. Interest rate and APR relate to the cost of borrowing, not to whether payments are current.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy