The borrower will not go to jail. Deferring on a loan is a civil charge that can lead to criminal charges. As a result, a genuine loan defaulter cannot go to prison. However, there are situations in which a criminal case may be filed against a defaulter if he/she -Does not repay despite being able toDiverts the loan or funds for reasons other than those provided while availing of the loanDisposes or transfers of collateral without the lender’s knowledge