A Study On Reasons For Loan Default

Malini Dhurga M.K, Assistant Professor of Law, VELS University

ABSTRACT:

Loan means an amount of money lent at interest by a bank to a borrower, generally on contributory security, for a certain period of time. It’s an extended tradition within the Western banking world. Loan Default means the condition of failing to meet an obligation. The original loan settings as set by the banks. A loss incurred by failing to complete. Example: Fail to pay the EMI of a personal loan etc. Loan default is the failure to make required interest repayments on a debt. For example, we took any kind of loan from a bank after we fail to pay the principal or interest on a loan. The time a default happens varies, depending on the terms agreed. Lenders will deem a loan in default when you haven't repaid on the time period. Loan default happens in all kinds of loans such as personal loan, professional loan, mortgages loan, business loans, home loans, etc. And finally, this loan default will affect our cibil score when we fail to repay the amount of interest on a loan. Loan defaults expose borrowers to legal claims and may limit their future access to credit. And a loan default will usually be categorized as a debt service default. The Findings are possible ways to refuse the Loan Default and many respondents have various forms to refuse loan default such as offer payment method, EMI plans. The main objective of the research is to analyze under which circumstance a person is unable to pay loans and also the possible ways to refuse the Loan Default. The research method follows is descriptive research. The data is collected through a questionnaire and the sample size is 200. Convenience sampling method is adopted in this study to collect the data. The samples were collected from friends and family members. The independent variables are gender, age, income, education qualification, occupation, and marital status. The dependent variables are aware of the consequences of non-repayment of loan. The researcher used graphs to analyze the data collected.

Keywords: Bank, Loan, Interest, Non-repayment, EMI, and Default