Glossary
What is Amortization?
Amortization is the process of repaying a loan through regular payments that cover both interest and principal over a set period. Early payments are weighted more toward interest, and later payments go more toward principal as the balance declines. An amortization schedule shows each payment's breakdown and the remaining balance. The amortization period can be longer than the loan's actual term, which creates a balloon payment at maturity.
Example
A $100,000 loan amortized over 10 years has payments calculated so the balance reaches zero after 120 monthly payments.
Related funding
Term Loans: A lump sum with fixed payments for big, planned moves.
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