Debt

Debt is an obligation to repay money or another resource to a creditor. It can arise through borrowing, deferred payment, or other agreements.

Loan: A loan is money or property transferred to a borrower under an agreement to repay it, often with interest. A loan is a common contract that creates debt and specifies repayment terms.
Creditor: A creditor is a person or institution entitled to receive payment from a debtor. Debt gives the creditor a claim to repayment.
Mortgage loan: A mortgage loan is borrowing secured by real estate, which may be claimed after borrower default. Mortgages finance property purchases while tying repayment to a specific asset.
Equity financing: Equity financing raises capital by selling ownership interests in a business. Unlike debt, equity financing generally promises no fixed repayment of principal or interest.
Debt-to-income ratio: A debt-to-income ratio compares a borrower’s debt payments with income over a specified period. Lenders use it to gauge whether new repayment obligations fit a borrower’s income.
Interest: Interest is compensation paid for the use of money, usually calculated as a proportion of principal over time. Interest can make the amount owed grow while debt remains outstanding.
Debtor: A debtor is a person or entity obligated to repay money or provide another resource. The debtor bears the obligation that defines the debt relationship.
Student loan: A student loan is borrowing used to pay for education and related expenses. Education debt can shape borrowers’ finances long after study ends.
Grant (money): A grant is money given for a purpose without an ordinary obligation to repay it. Grants fund needs without creating the repayment claim characteristic of debt.
Debt overhang: Debt overhang is a condition in which existing debt discourages investment because gains may mainly benefit creditors. Heavy obligations can suppress investment even when new projects could be productive.

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