There are numerous types of debt, including basic loans, syndicated loans, bonds, and promissory notes. Debt, especially large sums of debt, can be secured through a mortgage or other security interest over some of the debtor’s property, in which case the creditor will have some rights over that property in the event that the debtor becomes unable to repay the debt and defaults on the loan.

A basic loan is the simplest form of debt. It consists of an agreement to lend a principal sum of money for a fixed period of time, to be repaid by a certain date. In commercial loans interest, calculated as a percentage of the principal sum per annum, will also have to be paid by that date. It is usually paid back monthly, or six-monthly, in equal payments over the period of the loan. It can sometimes be paid back all at once at a later date (a balloon payment).

A syndicated loan is a loan that is granted to companies that wish to borrow more money than any single lender is prepared to risk in a single loan, usually many millions of dollars. A syndicate of banks is created, each agreeing to put forward a portion of the principal sum.

A bond is a debt security, and is only issuable by certain institutions, such as companies and government bodies. A bond entitles the holder to interest and principal repayments. When such an institution wishes to borrow money it will sell bonds in the marketplace to investors. They will have a fixed lifetime of between 3 and 50 years (though longer-term bonds tend to be less common), and at the end of that period the money will be repaid in full. During the period the borrower will pay interest (known as a coupon for bonds) at regular intervals. Bonds may be traded in the bond markets, and are widely used as relatively safe investments in comparison to shares.