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CIPS L5M3 Exam - Topic 1 Question 71 Discussion

Actual exam question for CIPS's L5M3 exam

Question #: 71
Topic #: 1

[All L5M3 Questions]

Dianne has a loan agreement which contains a clause for default. What does a clause for default imply?

Athis allows the lender to demand overdue payments are made straight away

Bthis allows a lender to demand payment from a guarantor if the borrower is unable to pay

Cthis allows the lender to declare insolvency

Dthis allows the lender to demand full payment of the outstanding balance

Show Suggested Answer

Suggested Answer: D

A Clause for Default 'allows the lender to demand full payment of the outstanding balance'. See p.102. And always read the small print before you sign a loan agreement :)

by Jarod at Aug 12, 2026, 12:49 PM

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Denny

4 days ago

I feel like the default clause could also involve guarantors, so B might be relevant too. It's a bit confusing.

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Maryrose

9 days ago

I remember something about lenders being able to call in the loan if there's a default, which sounds like D to me.

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Karina

15 days ago

I think a default clause means the lender can demand overdue payments, so maybe A? But I'm not entirely sure.

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