Search Investopedia

Debt Service

Filed Under » , , , , ,
Dictionary Says

Definition of 'Debt Service'

The cash that is required for a particular time period to cover the repayment of interest and principal on a debt. Debt service is often calculated on a yearly basis. Debt service for an individual often includes such financial obligations as a mortgage and student loans. Companies may have outstanding loans or outstanding interest on bonds or the principal of maturing bonds that count towards the company's debt service. An individual or company that is not able to make payments to service the debt can be said to be "unable to service (his/her/its) debt."
Investopedia Says

Investopedia explains 'Debt Service'

For example, a property developer is said to be "servicing a lot of debt" when he or she has made a large investment in a property and has not yet sold many of the subdivided lots or individual units. The debt service is simply how much money is owed on a loan, including both the interest and the principal amounts. Individuals seeking loans from banks and other lenders are often required to list their entire debt service (the amount of all outstanding loans and financial obligations) on an income statement (a profit and loss statement).

Related Definitions

  •

    Debt Discharge

    The cancellation or forgiveness of a debt. Debt discharge results in taxable income to the debtor unless the forgiveness is a gift or bequest.
    Read More »

  • Coupon

    The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually. This is also referred to as the "coupon rate" or "coupon percent rate".
    Read More »

  • Debt

    An amount of money borrowed by one party from another. Many corporations/individuals use debt as a method for making large purchases that they could not afford under normal ...
    Read More »

    • Debt-Service Coverage Ratio - DSCR

      1. In corporate finance, it is the amount of cash flow available to meet annual interest and principal payments on debt, including sinking fund payments. 2. In government finance, it is ...
      Read More »

    • Deficiency Agreement

      An arrangement in which a party provides a firm with funds to cover any shortfalls arising from capital or cash flow restraints, allowing the company to service its debt. A deficiency ...
      Read More »

    • Principal

      1. The amount borrowed or the amount still owed on a loan, separate from interest. 2. The original amount invested, separate from earnings.3. The face value of a bond.4. The owner of a ...
      Read More »

    • Mortgage

      A debt instrument that is secured by the collateral of specified real estate property and that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are ...
      Read More »

    • Residual Income

      The amount of income that an individual has after all personal debts, including the mortgage, have been paid. This calculation is usually made on a monthly basis, after the monthly bills ...
      Read More »

    • Mortgage Constant

      A ratio between the annual amount of debt servicing to the total value of the loan. The mortgage constant is only applicable to mortgages that pay a fixed rate. Also known as the ...
      Read More »

    • Recurring Debt

      Any payment used to service a debt obligation that occurs on a continuing basis. Recurring debt involves payments that cannot be easily canceled at the payer's request, including alimony ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions