Principal and Interest payment (P&I) Definition | Business Dictionaries from AllBusiness.com
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Business Definition for: Principal and Interest payment (P&I)
Dictionary of Business Terms
Principal and Interest payment (P&I)

periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to amortization of the principal balance; commonly used with amortizing loans.

See also amortize or amortization , debt service , mortgage constant
Dictionary of Real Estate Terms
Principal and Interest payment (P&I)

a periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to amortization of the principal balance. Commonly used with amortizing loans.

Example: A $1,200 annual principal and interest payment is required by a $10,000 face value amortizing mortgage at a 10% interest rate . $1,000 of the first year payment is required for interest; $200 reduces the outstanding balance to $9,800.

See also mortgage constant , amortization
Related Terms:
amortize or amortization

  1. reduction of a debt by periodic charges to assets or liabilities, such as payments on mortgages.
  2. in accounting statements, the systematic write-off of costs incurred to acquire an intangible asset, such as patents, copyrights, goodwill, organization, and expenses.

debt service

cash required in a given period, usually one year, for payments of interest and current maturities of principal on outstanding debt. In corporate bond issues, the annual interest plus annual sinking fund payments; in government bonds, the annual payments into the debt service fund.

mortgage constant

percentage ratio between the annual debt service and the loan principal.

mortgage constant

percentage ratio between the annual debt service and the loan principal.

amortization

gradual reduction of an amount over time. Examples are amortized expenses on limited life intangible assets and deferred charges. Assets with limited life have to be written down over the period benefitted. The amortization entry is to debit amortization expense and credit the intangible asset. However, unlimited life intangibles are subject to an annual impairment test.

Referring Terms:
P&I
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
 Copyright © 2004, 2000, 1997, 1993, 1987, 1984 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
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