Nonperforming Loan - NPL


DEFINITION of 'Nonperforming Loan - NPL'

A sum of borrowed money upon which the debtor has not made his or her scheduled payments for at least 90 days. A nonperforming loan is either in default or close to being in default. Once a loan is nonperforming, the odds that it will be repaid in full are considered to be substantially lower. If the debtor starts making payments again on a nonperforming loan, it becomes a reperforming loan, even if the debtor has not caught up on all the missed payments.


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BREAKING DOWN 'Nonperforming Loan - NPL'

Institutions holding nonperforming loans in their portfolios may choose to sell them to other investors in order to get rid of risky assets and clean up their balance sheets. Sales of nonperforming loans must be carefully considered since they can have numerous financial implications, including affecting the company's profit and loss, and tax situations.

  1. Nonaccrual Loan

    A nonperforming loan that is not generating the stated interest ...
  2. Renegotiated Loan

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  3. Reperforming Loan - RPL

    A loan on which the borrower was behind on payments (delinquent) ...
  4. Cash Basis Loan

    A loan where interest is recorded as earned when payment is collected. ...
  5. Default

    1. The failure to promptly pay interest or principal when due. ...
  6. Loan

    The act of giving money, property or other material goods to ...
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