In the context of finance, the term “due date” refers to the maturity date, which is when the payment for a loan, bond, draft, or other kind of financial instrument must be paid. On the due date, interest payments cease, as well. The term may also refer to the date on which a loan paid on instalment must be completely settled.
Financial instruments which involve loans to be paid on a set date are said to have fixed maturity. Instruments which fall under this classification vary, but as long as terms specified for these issues include a maturity date, otherwise known as a redemption date, they may be described as such.
Investors should take note of the maturity date of their securities, as this provides crucial information on how long interest payments will be received. It is also important, however, to find out if the bond is callable or not, because in such cases, the issuer may decide to repay the principal at any time.
It is possible, however, for a financial instrument not to have a fixed maturity date. These may be referred to as perpetual stocks. Since such loans are continuous, the parties involved in the loan may have to agree to certain payment terms eventually. In other cases, however, dates are set, but not in the same way as in fixed maturity instruments, as they cover a range of dates. This offers the borrower more flexibility to choose when to repay the loan.
On the other hand, under serial maturity, bonds are issued all at once. However, each of these bonds may have a different redemption date. This depends on the classification of each bond.
