Paydown

AAA

DEFINITION of 'Paydown'

This occurs when the amount a company or government repays in debt exceeds the amount they currently borrow. A Paydown takes place when a company reissues unpaid debt for less than the initial issue. For example, if a company pays $8,000,000 in corporate bond maturities and issues $5,000,000 in new bonds then the company has $3,000,000 less in debt because it has paid down its debt.

INVESTOPEDIA EXPLAINS 'Paydown'

Paydown is also when a mortgage borrower pays the principal and interest of a mortgage. In doing so, the borrower is paying down his or her debt. In general, Paydown also refers to repayment of any outstanding loan. It could mean paying down a car loan, credit card debt, school loan or any other type of debt.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Paydown Factor

    The portion of cash subtracted each month from the principal ...
  3. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  4. Loan

    The act of giving money, property or other material goods to ...
  5. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
  6. Buy Here Pay Here

    Used car dealers who also handle vehicle financing for the buyer, ...
RELATED FAQS
  1. How have low interest rates affected lease rates in the automotive sector?

    Low interest rates have contributed substantially to increased lease rates in the automotive sector. In recent years, the ... Read Full Answer >>
  2. Does shopping for the best interest rate affect my credit score?

    Shopping for interest rates does not necessarily affect a person's credit score. When a borrower submits an application to ... Read Full Answer >>
  3. What types of companies are in the automotive sector besides auto manufacturers?

    The automotive sector includes several types of companies besides auto manufacturers. Some of these companies focus on the ... Read Full Answer >>
  4. How much of an automaker's revenue is derived from service?

    Considering how much it costs to take a car or truck into an authorized dealer for service, you might assume that automakers ... Read Full Answer >>
  5. What is the difference between a collateralized debt obligation (CDO) and an asset ...

    An asset-backed security (ABS) is a security created by pooling non-mortgage assets that is then resold to investors. A collateralized ... Read Full Answer >>
  6. When during the economic cycle should I invest in the automotive sector?

    The best time to invest in the automotive sector is when the economy is emerging from a recession and interest rates are ... Read Full Answer >>
Related Articles
  1. Retirement

    How To Invest When You're Deep In Debt

    Debt is one of the biggest obstacles that prevents people from investing - but it shouldn't be.
  2. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  3. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  4. Bonds & Fixed Income

    The Risks Of Mortgage-Backed Securities

    Find out how weighted average life guards against prepayment risk.
  5. Options & Futures

    The Reverse Mortgage: A Retirement Tool

    Discover another way to fund your retirement without having to make payments on a loan.
  6. Trading Strategies

    Eyeing a Loan? Consider Skipping the Banks

    Peer-to-peer lending platforms, such as Lending Tree, Lending Club and Prosper, offer borrowers newfound leverage. Here's a look.
  7. Credit & Loans

    8 Top Alternatives to Car Title Loans

    Before you sign up for a car title loan, investigate these 8 alternate strategies.
  8. Credit & Loans

    Car Title Loan Requirements

    Here's a list of what you need to qualify for a car title loan. Most important: having sole ownership of your car with no liens.
  9. Credit & Loans

    Car Title Loan Limits

    You can usually get 25% to 50% of a car's value - but could pay more in interest than you borrowed if the loan rolls over a lot before it's paid off.
  10. Credit & Loans

    States That Allow Car Title Loans

    Only some states permit car title loans – and those that do may have restrictions. Check this list to see what to expect.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center