The Effect of Loan Term and Loan Interest Rate on the Amount of NonPerforming Loans and Debtor Occupation as a Moderating Factor in LPDs in North Kuta District

This study aims to analyze the effect of loan term and interest rate on nonperforming loans (NPL) with debtor occupation as a moderating variable at Lembaga Perkreditan Desa (LPD) in North Kuta District. The increasing number of bad loans in several LPDs indicates the need to examine internal financial factors that influence credit risk. This research employs a quantitative approach using multiple regression analysis and Moderated Regression Analysis (MRA). The sample consists of 64 observations of non-performing loan data collected from LPDs operating in North Kuta District. The results show that the loan term has a positive and significant effect on non-performing loans, indicating that the longer the loan period, the higher the likelihood of loan default. Likewise, the interest rate has a positive and significant effect on non-performing loans, meaning that higher interest rates increase the borrower’s repayment burden and the probability of default. Debtors’ occupation is able to moderate the relationship between loan maturity and the level of non-performing loans in a weakening direction. However, debtors’ occupation is not able to moderate the effect of interest rates on non-performing loans. The coefficient of determination (R²) of 0.277 indicates that the independent variables explain 27.73% of the variation in NPL, while the remaining 72.27% is explained by other factors outside the model. This research is expected to provide insights for LPD managers in setting credit policies, particularly in determining interest rates and loan terms, to reduce the risk of bad loans. It also contributes empirical evidence to the development of credit risk theory in community-based financial institutions.