Legal Definitions - paydown

Definition: A paydown is a loan payment that is less than the total loan principal.

Example: If you have a loan for $10,000 and you make a payment of $5,000, that payment is considered a paydown.

Explanation: A paydown is a partial payment made towards a loan. It is not the full amount owed, but rather a smaller amount that reduces the overall balance of the loan. In the example given, the borrower made a payment of $5,000 towards a $10,000 loan, which means they still owe $5,000. This is a common practice for borrowers who may not be able to make the full payment, but still want to reduce their debt.