What type of loan typically involves legal expenses paid by the borrower in default cases?

A covenant loan typically includes specific agreements or conditions that must be met by the borrower, and this can often extend to legal expenses related to the borrower's default. When a borrower defaults on a covenant loan, the lender may need to engage in legal proceedings to enforce the terms of the agreement. Since these legal processes can be complex and costly, the responsibility for these expenses often lies with the borrower, as outlined in the covenant terms.

In the context of other loan types, a conventional loan may or may not involve similar stipulations, as the terms can vary widely. A secured loan generally has collateral backing it but does not automatically imply that legal expenses in default situations would be borne by the borrower. Lastly, a personal loan is typically unsecured and may not have the same conditions as a covenant loan regarding legal expenses in default cases. Thus, the nature of the agreements tied to covenant loans makes them distinct in terms of legal responsibilities during default scenarios.