What Is a Self-Liquidating Policy?

A self-liquidating loan is a type of short term loan whereby the funds borrowed are used to buy some asset, which is in turn sold at the loan's maturity to repay the loan.

What is self liquidating assets?

Definition of Self Liquidating Asset

Asset that generates adequate income to return the total amount of its cost, such as a transporter's truck and a bank's mortgage loan portfolio.

Which debt are self liquidating?

A self-liquidating loan is a debt that is paid off from the cash flow generated by the assets originally acquired with the funds from the debt. The scheduled loan payments are typically structured to coincide with the cash flows generated by the underlying asset.