What does it mean to "default" on a loan?

To default on a loan specifically refers to the situation where a borrower fails to make the required payments on time as stipulated in the loan agreement. This failure to meet payment obligations can lead to serious consequences for the borrower, including penalties, a negative impact on their credit score, and potential legal actions by the lender.

When a borrower defaults, they are essentially breaching the contract they've entered into with the lender. This event can trigger a series of responses from the lender, including attempts to collect the debt, reporting the default to credit bureaus, and potentially starting foreclosure or repossession procedures if the loan is secured by collateral.

The other options describe different financial actions but do not encompass the definition of default. Paying off a loan ahead of schedule, taking out an additional loan, or requesting a lower interest rate are all potential financial maneuvers a borrower might consider, but none of them relate to failing to meet payment obligations, which is the core of what it means to default.