Classified Loan

AAA

DEFINITION of 'Classified Loan'

Any bank loan that is in danger of default. Classified loans have unpaid interest and principal outstanding, and it is unclear whether the bank will be able to recoup the loan proceeds from the borrower. Banks usually categorize such loans as adversely classified assets on their books.

INVESTOPEDIA EXPLAINS 'Classified Loan'

Classified loans have failed to meet acceptable credit standards according to bank examiners. The credit quality has essentially declined since initial approval was granted. This type of loan has a high rate of borrower default, and raises the cost of borrowing money for the other customers.

RELATED TERMS
  1. Commercial and Industrial (C&I) ...

    Any type of loan made to a business or corporation and not to ...
  2. Cash Collateral

    Cash collected when liquid assets are sold during Chapter 11 ...
  3. Bank

    A financial institution licensed as a receiver of deposits. There ...
  4. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  5. Interest

    1. The charge for the privilege of borrowing money, typically ...
  6. Loan

    The act of giving money, property or other material goods to ...
Related Articles
  1. Tired Of Banks? Try A Credit Union
    Retirement

    Tired Of Banks? Try A Credit Union

  2. The Evolution Of Banking
    Credit & Loans

    The Evolution Of Banking

  3. How To Make $1 Million In Finance
    Professionals

    How To Make $1 Million In Finance

  4. Promissory Notes: Not Your Average IOU
    Personal Finance

    Promissory Notes: Not Your Average IOU

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center