Repay

Repay is a verb meaning to give back the money or value that one has received, typically in the context of a loan, debt, or obligation. In finance, repayment refers to the act of discharging debt by making payments to the lender according to an agreed schedule, which may include both principal and interest.

Common repayment arrangements include amortizing loans with regular installments that gradually reduce the principal, interest-only periods, balloon payments at maturity, and revolving credit where outstanding balances are reduced through ongoing payments. Borrowers may repay early, known as prepayment, which can reduce total interest but sometimes incurs a prepayment penalty depending on the loan terms.

Repayment terms specify due dates, minimum payment amounts, grace periods for late payment, and consequences of missed payments, such as penalties or credit-score impact. On a broader level, the ability to repay is influenced by income, liquidity, and debt levels; a positive repayment history often improves creditworthiness.

The term also appears in non-financial uses, such as repaying a debt of gratitude or returning a favor, reflecting the broader social dimension of obligation. Etymology traces repayment to the Old French repaier or repayer, from payer "to pay" with re- "back."

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