A nonperforming loan (NPL) is a loan in which the borrower is in default due to the fact that they have not made the scheduled payments for a specified period. Although the exact elements of nonperforming status can vary depending on the specific loan’s terms, no payment is usually defined as zero payments of either principal or interest. The specified period also varies, depending on the industry and the type of loan. Generally, however, the period is 90 days or 180 days.
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