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. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
  5. Loan

    The act of giving money, property or other material goods to ...
  6. Buy Here Pay Here

    Used car dealers who also handle vehicle financing for the buyer, ...
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. Credit & Loans

    8 Top Alternatives to Car Title Loans

    Before you sign up for a car title loan, investigate these 8 alternate strategies.
  7. 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.
  8. 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.
  9. 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.
  10. Credit & Loans

    Does shopping for the best interest rate affect my credit score?

    Learn about hard and soft credit inquires and how shopping for credit may negatively affect credit scores. Explore strategies to avoid this.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center