Debt service is the minimum payment required to be made on a debt. It is typically expressed as a percentage of the outstanding principal balance. Debt service payments typically include interest and principal payments, although they may also include other fees, such as late fees or service charges. Debt service payments are typically made monthly or quarterly, and they can be either fixed or variable. Fixed debt service payments remain the same throughout the life of the loan, while variable debt service payments can fluctuate based on interest rates or other factors.
Debt service is an important part of managing debt. By making regular debt service payments, you can avoid defaulting on your loan and damaging your credit score. Debt service payments can also help you to reduce the amount of interest you pay over the life of the loan. In addition, debt service payments can help you to build equity in your home or other assets.