Everything you wanted to know about loan lifecycle and status

24.06.2020

mintosblog

Ever wondered how loans progress over time, or what all these loan statuses mean? Let’s get right into it and look at the loan lifecycle and statuses in more detail.

Loan lifecycle

The lending company issues a loan to the borrower from its balance sheet. The borrower receives the loan as a bank transfer or in cash.

The lending company places the loan on Mintos, making it available for investors to invest in.

Investors invest in fractions of the loan.

As the borrower repays the loan, the investors receive repayments on principal and interest on their investment.

Loan status

Statuses based on borrower payments
Current means The borrower is making payments on time.

Grace period is a set number of days after the due date during which payment may be made by the borrower without penalty. The exact number of days is determined by each lending company and can be found in the lending company list.

Late means the borrower failed to make a timely payment within the grace period. In this case, grace period days will be counted as late days. Late loans are further broken down by the number of late days.

– 1-15 days late
– 16-30 days late
– 31-60 days late
– 60+ days late

More than 99% of the loans on Mintos come with a buyback guarantee. This offers investors an additional layer of protection against borrower defaults, as the lending company will automatically buy back the loan from the investor at the nominal value of the outstanding principal plus accrued interest if it’s more than 60 days late.

Default means the loan agreement has been terminated by the lending company, and the outstanding balance of the loan is due and payable. The lending company has initiated debt collection on the loan. Investors receive regular updates on the debt collection in the Debt Collection section of the Loan Details.

Bad debt means there is no longer a reasonable expectation of further payments on this loan. The bailiff or court has declared no funds can be recovered.

Statuses based on maturity

Finished means the loan has reached maturity and has been fully repaid by the borrower. The key here is that this status is based on borrower repayments, hence loans can be finished even if the investor hasn’t received the payment yet (see pending payments below).

Finished prematurely means the loan was bought back by the lending company before it reached maturity. This can happen when the buyback guarantee kicks in, or the agreement between the borrower and the lending company is terminated (for example, borrowers often have a contractual right to repay their loan early).

Statuses based on money transfer

Pending payments refer to money that is in the process of being transferred to the investor’s account. This transfer can’t happen instantly, as money needs to be moved from the lending company to Mintos, mostly internationally. Read
more about how pending payments work on our blog.

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