SynopsisIf you are confused by personal finance terms, jargon and calculations, here’s a series to simplify and deconstruct these for you. In the 104th part of this series, Riju Mehta explains the difference between the terms used for unpaid loans.If you miss the instalments, it can impact your borrowing record and credit score.When you take a loan from a financial institution, you are expected to repay the amount as per the scheduled equated monthly instalments (EMIs) in the specified duration. If you miss the instalments, it can impact your borrowing record and credit score. Depending on the duration for which you miss repayments, a loan is classified as delinquent or a default, and as per the lender’s classification, it’s called a nonperforming asset (NPA).DelinquencyIf you fail to pay even a single loan instalment by due date or make a late payment, the loan will be termed delinquent. The lender sends out reminders to the borrower and the status can usually be rectified by making the missed payment along with the applicable penalty or late fee. The lender contacts the credit bureaus if the delinquency continues and it can affect the borrower’s credit rating slightly. Delinquency can be considered a red flag for future loan applications.Delinquency vs default
Delinquency vs default: Know the difference and how they affect your credit score and borrowing ability - The Economic Times
If you are confused by personal finance terms, jargon and calculations, here’s a series to simplify and deconstruct these for you. In the 104th part of this series, Riju Mehta explains the difference between the terms used for unpaid loans.
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