Recovery Rate

Recovery Rate refers to the percentage of a loan or debt that a lender is able to recover after a borrower defaults or fails to repay. It indicates how much of the original amount can be recouped through various means, such as selling collateral or legal actions. For example, if a bank lends $100,000 and recovers $60,000 after the borrower defaults, the recovery rate is 60%. This metric helps assess the risk and potential losses associated with lending and is crucial for financial analysis and decision-making.