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LSDefine
Simple English definitions for legal terms
debt retirement
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A quick definition of debt retirement:
Debt retirement refers to the process of paying back money that was borrowed. This can include paying off the original amount borrowed, as well as any interest that has accrued over time. When someone takes out a loan or uses a credit card, they are taking on debt that will need to be retired at some point. Debt retirement can be done in regular installments over time, or in one lump sum payment. It is important to manage debt carefully to avoid financial difficulties in the future.
A more thorough explanation:
Definition: Debt retirement refers to the repayment of debt.
Debt Security: A debt security is a financial instrument that represents a loan made by an investor to a borrower. Examples of debt securities include bonds, notes, and debentures.
Debt Service: Debt service refers to the funds needed to meet a long-term debt's annual interest expenses, principal payments, and sinking-fund contributions. It also includes payments due on a debt, including interest and principal.
Example: If a company takes out a loan to purchase new equipment, they will need to make regular payments to the lender to retire the debt. These payments will include both interest and principal, and will continue until the entire debt has been repaid.
Explanation: The example illustrates the concept of debt retirement by showing how a company must make regular payments to retire a debt. These payments include both interest and principal, and continue until the entire debt has been repaid.