DEFINITION of 'Doubtful Loan'

A loan where full repayment is questionable and uncertain. Degree of repayment of loans in question range from a complete loss to uncertain loss unless corrective actions are taken. Doubtful loans are usually non-performing loans on which interest is overdue and full collection of principal is uncertain.





BREAKING DOWN 'Doubtful Loan'

A loan classified as doubtful has all the characteristics of a substandard loan and credit weakness making full collection questionable and improbable. Fifty per cent of loans classified as doubtful are deducted from adjusted bank capital in computing regulatory capital adequacy.



RELATED TERMS
  1. Cash Basis Loan

    A loan where interest is recorded as earned when payment is collected. ...
  2. Standing Loan

    A type of loan where payments are made of interest only. Repayment ...
  3. Term Loan

    A loan from a bank for a specific amount that has a specified ...
  4. Non-Performing Asset - NPA

    A classification used by financial institutions that refer to ...
  5. Adversely Classified Asset

    A type of loan classification in which the loan or other asset ...
  6. Direct Consolidation Loan

    A loan that combines two or more federal education loans into ...
Related Articles
  1. Personal Finance

    Student Loan Debt: Is Consolidation The Answer?

    Consolidating your student loans offers convenience, but there are drawbacks.
  2. Personal Finance

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.
  3. Insights

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.
  4. Personal Finance

    Personal Loans vs. Car Loans

    How to tell whether a personal loan or a car loan is better for you.
  5. Retirement

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  6. Taxes

    What's a Nonperforming Loan?

    A nonperforming loan is any borrowed sum where the borrower has failed to pay scheduled payments for at least 90 days.
  7. Personal Finance

    Understanding Loans

    A loan is the act of giving money, property or other material goods to another party with the expectation of being repaid.
  8. Personal Finance

    All About Government Loans

    There are many reasons to seek a government loan rather than one from a private lender. Government loans typically have low interest rates and offer fixed or subsidized options, as well as deferred ...
  9. Retirement

    Sometimes It Pays to Borrow from Your 401(k)

    401(k) loans have been demonized, but they're often the most beneficial source of cash.
RELATED FAQS
  1. Are secured personal loans better than unsecured loans?

    Read about the differences between secured loans and unsecured loans and how they are used. Learn about forms of collateral ... Read Answer >>
  2. What are the typical repayment terms for a syndicated loan?

    Learn more about syndicated loans and how they are structured, specifically including the typical repayment terms for a syndicated ... Read Answer >>
  3. What are the pros and cons of consolidating my student loans?

    Read about the possible advantages and disadvantages of consolidating your student loan debts, and find out how to determine ... Read Answer >>
  4. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  5. What are the differences between delinquency and default?

    Find out more about loan delinquency, loan default, and the difference between a loan borrower defaulting and being delinquent ... Read Answer >>
Trading Center