Delinquency

Delinquency refers to the status of a loan when a borrower fails to make a scheduled payment by the due date. In auto financing, delinquency is typically measured in 30-day intervals, with lenders reporting accounts as 30, 60, or 90 days delinquent to credit bureaus.

Unlike default, which signifies a more permanent breach of contract, delinquency is an early warning stage that can often be resolved if the borrower catches up on payments quickly. Delinquency negatively impacts credit scores, though the severity depends on how late the payments are and how frequently they occur.

A single 30-day delinquency may lower a score modestly, but repeated or prolonged delinquencies can severely damage credit. Lenders monitor delinquency closely as a predictor of default risk and may contact borrowers with reminders, collection calls, or late fee assessments.

Borrowers who fall behind should act quickly by communicating with their lender, requesting extensions, or adjusting their payment schedule. In some cases, refinancing or loan modifications can help bring delinquent accounts current.

For lenders, managing delinquency is critical to maintaining healthy loan portfolios and minimizing losses. For borrowers, avoiding delinquency protects creditworthiness, reduces stress, and prevents escalation into default or repossession.

Recognizing delinquency as an early-stage problem allows individuals to take corrective action before the situation worsens.