# Grace Period Unfortunately, defaults happen sometimes, but they are rarely the desired outcome for Borrowers. Moreover, while some defaults arise due to a real inability to repay the loan, some occur due to unforeseen circumstances, or even simple forgetfulness, delaying repayment. We recommend using our [Notification System](https://zharta.gitbook.io/zharta-welcome-kit/legacy/nft-lending-v1/as-a-borrower/notification-system) to get reminders regarding loan deadlines. To avoid these unnecessary defaults, we provide a 48-hour Grace Period as an extra opportunity for users to repay their loans. After a loan reaches maturity, it transitions to a Defaulted state (see image below). During the Grace Period, it will remain in the Ongoing Loans section, allowing the user to repay it (plus a penalty fee) to recover their assets. {% hint style="warning" %} During these 48 hours, the Borrower can avoid losing their collateral by repaying the amount borrowed plus accrued interest, in addition to a penalty fee for late repayment {% endhint %} $$ PenaltyFee=min(0.025\*Principal;0.2ETH) $$ $$ PenaltyFee=min(0.025\*Principal;USDC 300) $$ {% hint style="info" %} **Example:** Borrower defaults on loan with 10 ETH principal and 0.3 ETH accrued interest. * Penalty fee = min(2.5% x 10 ETH, 0.20 ETH) = min(0.25 ETH, 0.20 ETH) = 0.20 ETH * Grace Period Price = 10 ETH + 0.3 ETH + 0.2 ETH = 10.5 ETH {% endhint %}