amortization
n.n. the process of paying off a loan in equal amounts over a set period of time. It also refers to spreading the cost of a large asset over its useful life instead of paying for it all at once.
n. the systematic allocation of the cost of an asset over its useful life or the repayment of a loan in equal instalments. In finance, it refers to the gradual reduction of a debt through regular payments.
The monthly amortization of the mortgage includes both interest and principal.
The company uses straight-line amortization to spread the cost of its new software across five years.
By calculating the amortization schedule, the lender can determine the exact amount of principal and interest paid in each period, ensuring the loan is fully repaid by the end of the term.
From Middle English amortisen (“to kill, alienate in mortmain”), from Anglo-Norman amorteser, alteration of Old French amortir, from Vulgar Latin *admortire (“to kill”), from Latin ad- and mors, mortem (“death”).