Zhaolian Finance's Two-Year Sale of 21.6 Billion Non-Performing Loans: Average Overdue of 1,500 Days, Violent Collection Incidents Frequently Occur

（Source: Industrial Capital）

China Merchants UnionPay Consumer Finance Co., Ltd. (hereinafter, Zhaolian Finance), which has long positioned itself as an “A+ student” in the industry, has run into no shortage of troubling issues this year.

In January 2026, a non-performing asset listing announcement involving 62 billion yuan pushed Zhaolian Finance, which has always operated steadily, to the forefront of public opinion. Immediately afterward, the 2025 performance announcement released even more negative signals, including a “second consecutive decline” in revenue and net profit that has stalled.

Now, against the backdrop of regulators lowering the upper limit for interest rates, emphasizing the transparency of fees and charges, clearly setting out collection “red lines,” and requiring funding parties to enhance their independent risk-control capabilities, how should Zhaolian Finance reverse its previously extensive growth model, and truly make inclusive finance take root in practice?

Disposal and sale of 21.0 billion yuan in non-performing assets

At the beginning of 2026, a listing announcement from the YinDeng Center pushed Zhaolian Finance to the forefront of public scrutiny.

The announcement shows that Zhaolian Finance listed five tranches of individual consumer non-performing loans. The total outstanding principal and interest amounted to as much as 62.7 billion yuan, involving about 250,000 borrowers and 690,000 loans.

What is shocking is that the weighted average days past due for these assets has already reached 1,510 days. This means that the vast majority of these loans have been overdue for more than four years, making them a typical case of “zombie debts.”

This is not an isolated case. Public data statistics show that in just the first half of 2025, the scale of non-performing loans that Zhaolian Finance transferred via listings on YinDeng Center already exceeded 8.5 billion yuan—making it the consumer finance company with the largest listing scale in the industry for the same period.

In the second half of 2025, Zhaolian Finance continued to list about 7.0 billion yuan in non-performing assets as well. Ranking by the full-year scale of non-performing assets—154 billion yuan—it ranked second in the industry.

《Industrial Capital》calculations show that, adding the 62 billion yuan in non-performing loans listed at the start of this year, over more than a year Zhaolian Finance has cumulative listed and disposed of 21.6 billion yuan in non-performing assets.

Although the large-scale listing and low-discount sale of non-performing assets by consumer finance companies is seen as an active risk write-off and clearing move, it also indirectly reflects hidden issues in those companies in past years regarding risk control and loan quality.

Take Zhaolian Finance as an example. For the first five tranches of non-performing loans in 2026, their weighted average expected days have already exceeded 1,500 days. Compared with the weighted average days past due for the previous year’s first five tranches, this is nearly 300 days more—indicating that the difficulty of recovering its “bad debts” is becoming increasingly higher.

Meanwhile, performance data further confirms the operating pressure faced by Zhaolian Finance.

Public data show that from 2023 to 2025, Zhaolian Finance fell deeply into the predicament of “a double decline in revenue and net profit.” Specifically, from 2023 to 2025, Zhaolian Finance’s revenue fell from 19.602 billion yuan to 16.144 billion yuan, while net profit dropped from 3.6 billion yuan to 3.054 billion yuan.

Behind Zhaolian Finance’s “two straight declines” in revenue, there are impacts such as weaker demand for personal credit and policy-driven compression of interest rate spreads. But the company’s “decline” in net profit mostly comes from “credit value losses” arising from write-offs and provisions for non-performing loans.

Data show that from 2021 to 2025, Zhaolian Finance’s scale of non-performing asset listings on YinDeng Center rose from 5.4 billion yuan to 15.4 billion yuan. Most of these listed and transferred non-performing assets were sold at prices below 0.4 of the value, which clearly shows the extent to which net profit has been eroded.

Even more seriously, since 2025, Zhaolian Finance has directly handled non-performing loans by “write-off and transfer, with no involvement in the collection-after-litigation process.” While this improves the efficiency of Zhaolian Finance removing non-performing loans from its books, it also comes at the cost of compliance and reputation being heavily depleted.

After all, once a “shedding-baggage” image forms, it is easy for the outside world to interpret it as “failure in risk control” and “lying flat and accepting losses.”

Complaints about “fee and interest rates” are coming one after another

The rapid rise of Zhaolian Finance has largely benefited from channel enablement by its shareholders—China Merchants Bank and China Unicom. However, precisely this “double-edged sword” has now become the source of its compliance risks.

Media investigations found that, as a shareholder, China Unicom’s channels have long been associated with inducing users to take out loans under names such as “free phone gifts” and “phone bill cashback.” Even worse, some elderly users lacking financial knowledge only became aware that they had taken on loans after they were harassed by collection calls.

This kind of “swap the components” marketing practice violates the appropriateness principle for financial product sales. As a licensed institution, Zhaolian Finance should have conducted substantive reviews of borrowers’ willingness to borrow and repayment ability. Yet Zhaolian Finance—sitting within the “traffic” of the shareholder channels—simply discarded those checks.

At the same time, in interest rate pricing, Zhaolian Finance has also fallen into the public-opinion vortex of “usury.” Although regulators have repeatedly ordered consumer finance companies to clearly disclose annualized interest rates and keep fee and interest charges within 24%, on the platform of Black Cat Complaints 【Download Black Cat Complaints client】, there are countless complaints about Zhaolian Finance’s interest and fee charges exceeding the standard.

One user complained that when Zhaolian Finance lent 10,000 yuan, the interest for one year was as high as 4,614.81 yuan, which translates into an annualized interest rate of 46%. Another user also pointed out that the daily overdue penalty interest rate stipulated in its loan contract is 0.0938%, translating into an annualized rate of 34.24%, far exceeding the statutory protection ceiling. There are even users reporting that a loan of 75,000 yuan with 36 periods of fee charges totals as much as 19,680 yuan, and the annualized fee-and-interest rate exceeds 42%.

In fact, these high amounts of interest and fees are often hidden within service fees, guarantee fees, or complex penalty-interest calculations. In its cooperation channels, has Zhaolian Finance—the party providing the funds—also tacitly allowed related cooperation platforms to engage in disguised charges?

However, records of punishment by regulators further substantiate the compliance loopholes mentioned above.

According to publicly available information, in 2022, Zhaolian Finance was fined 2.9 million yuan for eight violations including exaggerated and misleading marketing and improper collection behavior. In December 2025, Zhaolian Finance was fined another 0.5 million yuan due to issues in cooperation-entity management and controls over the uses of funds after loan disbursement.

Frequent reports of abusive debt collection

At the same time that the “high fee and interest rate” issue was being questioned, abusive debt collection was also distorting Zhaolian Finance’s original intent of inclusive finance.

The Black Cat Complaints platform shows that as of March 30, the cumulative number of complaints including the search term “Zhaolian Finance” reached 29,652.

Among them, in the nearly 30 days, the number of complaints reached 437, with an average of nearly 15 complaints per day. Meanwhile, the number of complaint completions was only 130, giving a completion rate of merely 30%. Moreover, most of them were “automatically completed by the system.”

It is worth noting that among the nearly 30,000 complaints mentioned above, besides “interest charges exceeding the cap,” abusive debt collection ranks second and stays there.

For example, one user lamented that after being overdue for just one day, they were bombarded with phone calls, leading to a mental breakdown and “the desire to end their life.” Another pregnant user complained that even after proactively communicating to repay, she was still threatened and intimidated by a third-party collector, severely affecting the health of the fetus.

It is also worth noting that even when users were able to get in touch, the collectors still maliciously harassed their friends and family, disclosing the users’ personal debt information. This openly violates the Personal Information Protection Law and the 《Debt Collection Work Guidelines》 introduced in 2026.

In addition, faced with debtors’ requests for negotiation, there even emerged extreme arrogance. Large numbers of users complain that staff refused to negotiate repayment, took a hard-line attitude, and even cases arose where there was “actual deduction that was not executed according to the negotiation outcome.” This approach of “only collecting money and not listening to explanations” undoubtedly pushes many borrowers into an even deeper abyss.

At the same time, Zhaolian Finance is still a “very active participant” in judicial litigation. Data from the Qichacha platform show that the company is involved in more than 40,000 court ruling documents, and court hearing announcements are as many as more than 70,000—clearly a “heavy hitter” in litigation.

Under such a high frequency of lawsuits, it indirectly reflects the company’s lack of effective mechanisms for debt restructuring and negotiation, and even a habit of simply resorting to lawsuits and letting it end there.

Evidently, under tightening regulation, with user complaint volumes still staying high, can Zhaolian Finance still regain the inclusive finance spirit of a top-tier consumer finance institution with a scale of 100 billion?

(This article is based on analysis of publicly available data and materials and does not constitute any investment advice.)

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