Default Rates

Default rates refer to the percentage of borrowers who fail to repay their loans as agreed, typically by missing payments or stopping payments altogether. This metric helps lenders assess the risk associated with lending to a particular group or type of loan. A higher default rate indicates a greater level of risk, while a lower rate suggests borrowers are generally able to meet their repayment obligations. Monitoring default rates is essential for financial institutions to manage risk, set interest rates, and ensure the stability of lending practices.