debt

thumb|right|Payday loan businesses lend money to customers, who then owe a debt to the payday loan company.

AI overview

Debt is money that one person or organization owes to another after borrowing it, as shown in the example of payday loan customers who receive money from a lender and then owe it back. Debt matters because it creates a financial obligation that borrowers must repay, often affecting their financial situation and future ability to borrow money.

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Image: 1979 $10,000 Treasury Bond .jpg

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Commons category: Debt
P8168: Shawmut Peninsula

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~19 min read

Article

24 sections

Contents

Etymology
Terms
Principal
Repayment
Default provisions
Types of borrowers
Individuals
Businesses
Governments
Municipalities
Assessments of creditworthiness
Income metrics
Value metrics
Collateral and recourse
Role of rating agencies
Debt markets
Market interest rates
Loans versus bonds
Role of central banks
Effects on mental health
History
Further reading
See also
References

thumb|right|Payday loan businesses lend money to customers, who then owe a debt to the payday loan company.

Debt is an obligation that requires one party, the debtor, to pay money borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity.