Definition of Debt in Finance.

Debt is any money borrowed from a 3rd party that has to be paid back. Companies will typically use debt either as a cheap means of funding or to fund purchases would otherwise be unaffordable to them.

Usually, debt is repaid over a specific time period with a pre-determined rate of interest being paid on the debt. The repayments of the lump sum are called the principal and the interest payments are just called interest.

Also, there are good debts and bad debts.