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Repayment rates measures the amount of payment received with respect to the amount due. It measures the rate of loan recovery and indicates the recovery performance. It does not indicate the quality of the portfolio. Two formulas are shown below to measure the rate of payments received as against the payment due and past due:
The likelihood that a borrower won't be able to return a loan, which could cause financial loss. Credit risk essentially refers to the possibility that a lender won't get the principal and interest that is owed, which would disrupt cash flows and raise collection expenses.
On time repayment rate
Amount received on time/ total amount due
By the end of the federal fiscal year in which they reached their 36th month of repayment, the on-time repayment rate is the proportion of borrowers from a school who have made at least 90% of their due payments.
Repayment rate
Repayment rate
Amount received (due and past due)/ total amount due plus amount past due .
There is no universally accepted definition for this phrase, but one that is frequently used is the proportion of borrowers who, within three years of entering repayment, did not default on their loans and who decreased the balance owing by at least $1.
Loan Delinquency
Loan Delinquency
To measure the loan delinquency, the following is the commonly used formula:
When you skip a scheduled installment payment or make installments that are late (even by one day).
Delinquency
Delinquency
Amount past due/Amount outstanding
Juvenile criminal activity committed before the age of majority.
These formulas consider only payments, which have become overdue. It doesn't give the actual amount of risk involved because of the missed payments.
• Payments that are past due may be small relative to total loan amounts; thus, an arrears rate is usually a small number. Hence problems often go unnoticed until it is too late to correct them.
When a client misses a payment on a loan, the arrears rates consider only the missed payments, but there is also an increased risk that the MFI will lose all the subsequent payments as well. It is this later risk much larger that the arrears rate fails to capture.
Arrears rate vary on how MFI define "late payment"
• Some MFIs do not include a payment in the calculation unit it is 30 or 90 or 180 days late
Other program does not count any payment as late unit the entire term of the original loan has expected
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