Loan NPA: What Non-Performing Assets Are and Why They Matter for Banks and Borrowers
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Key terms
- AssetAnything of value that an individual or company owns, such as cash, investments, real estate, or personal property. Assets are the foundation of building wealth.
- Loan-to-Value Ratio (LTV)The ratio of a loan amount to the appraised value of the property, expressed as a percentage. Lower LTV ratios typically result in better loan terms and may avoid PMI requirements.
- NFT (Non-Fungible Token)A unique digital asset stored on a blockchain that represents ownership of a specific item such as artwork, music, collectibles, or virtual real estate. Unlike cryptocurrencies, NFTs are not interchangeable because each one has distinct properties and value. They use smart contracts to verify authenticity and track ownership history.
- Credit Builder LoanA small loan specifically designed to help people build or rebuild their credit history, where the borrowed money is held in a savings account while you make payments. As you make on-time payments, the lender reports your positive payment history to the credit bureaus. Once the loan is fully paid off, you receive the funds, having both improved your credit and built savings.
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