What does the term Debt Service include?

Debt Service refers specifically to the total amount of money required to cover the repayment of borrowed funds. This includes both principal and interest payments made over a specified period. When a borrower takes out a loan, they commit to repaying the lender the amount they borrowed (the principal) plus additional costs for borrowing that money (the interest).

In property management and real estate contexts, understanding debt service is critical because it affects cash flow and the overall financial health of a property or investment. By including both principal reduction and interest in the definition, one gains a complete view of what is obligated in terms of loan repayment, which is essential for budgeting and financial analysis. Therefore, the correct answer captures this comprehensive perspective on financial obligations tied to debt.