Which term refers to the annual interest and principal repayments on debt?

Which term refers to the annual interest and principal repayments on debt?

• A. Debt
• B. Debt Outstanding
• C. Debt Service
• D. Debt Relief

Answer: (C)

Debt service is the annual cost of borrowing, consisting of interest plus principal repayments. It represents the money that must be paid each year to keep the loan current and is a key measure of a borrower’s ability to meet obligations. It’s different from the total amount borrowed (debt) or the remaining unpaid balance (debt outstanding), and it’s not about forgiving or reducing the loan (debt relief). So the term that matches annual interest and principal repayments is debt service.

Debt service is the annual cost of borrowing, consisting of interest plus principal repayments. It represents the money that must be paid each year to keep the loan current and is a key measure of a borrower’s ability to meet obligations. It’s different from the total amount borrowed (debt) or the remaining unpaid balance (debt outstanding), and it’s not about forgiving or reducing the loan (debt relief). So the term that matches annual interest and principal repayments is debt service.