Definition: Failure to meet a loan obligation according to the agreement.
In plain words
Default means you have not met the terms of your loan agreement, usually by missing payments. The agreement says when a missed payment becomes a default.
Why it matters
Default can trigger extra fees and interest, collection activity and a negative mark on your credit report. Many provinces and states limit default charges, so check the rules where you live.
Example
Illustrative example: You miss a $120 instalment. The agreement says the loan is in default after 30 days without payment. After that, the lender can add a default charge allowed by local law, report the missed payment and pass the debt to a collector.
Always read the term in the context of your own agreement and local law.
Related terms and guides
Missed payment guide · Late and returned-payment fees · Total repayment