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. Retirement

    Tired Of Banks? Try A Credit Union

  2. Credit & Loans

    The Evolution Of Banking

  3. Professionals

    How To Make $1 Million In Finance

  4. Personal Finance

    Promissory Notes: Not Your Average IOU

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center