What term means the failure to pay back a loan?

• A. Bankruptcy
• B. Deferrment
• C. Default
• D. Delinquent

Answer: (C)

The concept being tested is identifying the specific term for not meeting a loan’s repayment obligations. The best term is default because it denotes failing to repay a loan as agreed, typically after missing payments or breaching other conditions. When a loan is in default, the lender can take steps such as accelerating the loan, pursuing collections, or reporting the default to credit bureaus, which harms your credit score. This is distinct from being delinquent, which means payments are late but the loan hasn’t been formally put in default yet. It’s also different from bankruptcy, a legal process to discharge or reorganize debts, and from deferment or deferral, which are temporary pauses in payments rather than a failure to pay.