I. Classification of loan quality
At present, China mainly adopts international practice (risk degree) to classify loan quality, commonly known as five-level classification, including five categories: normal, concerned, secondary, suspicious and loss, among which the latter three categories belong to non-performing loans, also known as problem loans.
Second, is the subprime loan a bad loan?
Frequent loans belong to the lighter category of non-performing loans. At this stage, the borrower's repayment ability is already very problematic, and the income cannot be repaid normally. However, he has assets in his name or can solve the problem through financing, and this loan may lose part, so it is classified as a subprime loan.
Third, what will be classified as subprime loans?
In daily life, no matter individuals or small and medium-sized enterprises, they will inevitably encounter some problems, such as office workers' companies closing down or having no money to pay their salaries, unable to find a suitable job in a short time, having no income or deposits to repay, and loans may be overdue.
Small and medium-sized enterprises are operating at a loss, with negative liquidity and facing the risk of bankruptcy. They may need to sell assets to maintain their operations, and they will not be able to repay them in the short term.
If the bank finds that the borrower used forged information or improper means to obtain the loan, it may not be able to recover the loan normally.
There are other situations that can also cause subprime loans. For example, if the principal or interest is overdue by 9 1 day to 180 days, it will also be classified as a subprime loan, which will have a negative impact on credit reporting. It is recommended to pay off as soon as possible.