Default or Penal Interest is an additional interest rate applied by financial institutions when loan payments are missed. This penalty is levied to deter late payments and offset the risks and operational burdens associated with delayed reimbursements. Consequently, the imposition of penal interest elevates the overall expense of borrowing for delinquent individuals. In a broader economic context, elevated default risks compel banks to maintain higher prevailing market interest rates to safeguard against potential financial losses. Thus, the likelihood of default and the subsequent application of penal interest exert a direct impact on overall market interest rates.