Advanced English Dialogue for Business – Level debt service

Listen to a Business English Dialogue About Level debt service

Ava: Hi Scott, have you heard about level debt service in business and finance?

Scott: Yes, I have. Level debt service refers to a loan repayment plan where the borrower pays the same amount of principal and interest each period, resulting in a consistent total payment over the loan term.

Ava: That’s correct. Level debt service is often used for mortgages and other long-term loans to help borrowers budget and plan their payments effectively.

Scott: How does level debt service differ from other repayment plans?

Ava: Unlike other repayment plans where the payment amounts may vary over time, with level debt service, the total payment remains constant, but the portion allocated to principal and interest changes.

Scott: I see. So, with level debt service, borrowers pay more toward interest at the beginning of the loan term and more toward principal as the loan matures?

Ava: Exactly. Over time, as the outstanding principal balance decreases, the portion of the payment allocated to interest decreases, and more goes toward paying down the principal.

Scott: Are there any advantages to using level debt service for loans?

Ava: Yes, level debt service provides predictability and stability for borrowers, making it easier to budget and plan for loan payments over the long term.

Scott: Thanks for explaining, Ava. I have a better understanding of level debt service now.

Ava: No problem, Scott. I’m glad I could help. Let me know if you have any more questions about business and finance topics.