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

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

• A. Default rate
• B. Delinquency rate
• C. Interest rate
• D. APR

Answer: (A)

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.