Is a company: no
Is a proper noun: no
- in the red
- in hock
- in the hole
Definition of Debt
- An obligation or liability to pay or render something to another person or a firm.
Related Terms and Acronyms
- Refinancing — Definition,
- The act of paying off one mortgage with another mortgage to take advantage of lower interest rates. Refinancing is also used to transform equity into cash for vacations, home improvements, or for consolidating debt.
- Unsecured Claim — Bank,
- A claim or debt where the creditor has no guarantee of repayment because collateral is not required from the borrower. Credit is granted solely on an assessment of the debtor's future ability to repay the claim or debt.
- Refinance — Bank,
- To arrange a new loan for an increased amount or better terms whereby the old loan is paid off from the proceeds of the new loan.
- Swap — Bank,
- An agreement between two businesses to exchange commodities, payments or other financial products to reduce the risk of volatile market conditions or to obtain a better price or rate. For example, interest rate swaps, where floating rate interest is exchanged for fixed rate interest, protects a corporation against rises in rates or allows it to take advantage of a better rate. A cross-currency swap enables two parties to enter into an agreement in which one exchanges its currency for the other's to meet their separate requirements.
- Credit Report (CR) — Bank, Very Important,
➥ A report that outlines the credit worthiness of an individual or entity.
- A report on a loan applicant's willingness and ability to make payments in a timely manner in the past. This report is provided to the bank by an outside agency.
- Investment — Bank,
- Something you put your money into in order to make money.
- Securities/Investment Dealer — Bank,
- One who acts as the agent for another party to buy and sell securities and other investments; also an underwriter.
- Interest-Crediting Methods — Bank,
- A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.
- Collateral — Bank,
- Any property pledged as security for repayment of a debt.
- Secured Debt — Bank,
- A debt that is secured by a lien on debtor's property that may be taken by the creditor in case of non-payment by the debtor. A common example is a mortgage loan.
- Bad Debt — Bank,
- Money that cannot be collected is considered bad debt. Businesses can deduct bad debts under certain circumstances. If a bad debt is personal, it can also be deducted in some instances as a short-term capital loss.
- First Lien — Definition,
- Primary claim by the lender for satisfaction of outstanding debt. A first mortgage creates a first lien.
- Debt Consolidation — Bank,
- The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan. CanEquity has access to Canada's best debt consolidation products, for more info about debt consolidation see our debt consolidation page.
- Long-term Liabilities — Bank,
- Money owed over a period longer than 12 months, such as mortgages, bank loans, and other obligations.
- Total Debt Service (TDS) — Acronym, Important,
- The ratio of a borrower's total monthly debt payments to his or her monthly gross income. Lenders use this ratio to determine how much of a loan a borrower is qualified for.
- Short-term Liabilities — Bank,
- Money that you have to pay in less than 12 months, including wages, short-term loans, taxes, credit card balances and long-term loans.
- Instalment — Bank,
- The regular periodic payment that a borrower agrees to make the lender.
- Solvency — Bank,
- To be able to meet one's financial liabilities in the short or long term.
- Security — Bank,
- A tradable financial implement that represents ownership, the rights to ownership or debt.
- A document stating ownership of a stock or bond.
- Property designated as collateral.
- Liabilities — Bank,
- A borrower's debts and legal obligations.
- Sub-prime Mortgage — Definition, Important,
- A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.
- Credit Rating (CR) — Bank, Very Important,
➥ A metric to measure the credit worthiness of a debtor.
- A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
- Debt-to-Income Ratio — Bank,
- The percentage of an individual's income that is used to repay debt.
- Futures — Bank,
- Contracts to buy something in the future at a price agreed upon in advance. They first developed in the agriculture commodity markets but often involve foreign exchange, Eurodollar deposits and government bonds.