Amortization
Amortization
Amortization (/əˌmɔːrtɪˈzeɪʃən/; from the Latin amortizare, meaning 'to kill') is a term used in the field of finance and accounting to refer to the process of gradually reducing a debt over a period of time through regular payments. The payments may be made to the principal or to the interest on the loan, with the overall aim of reducing the loan balance.
Etymology
The term 'amortization' is derived from the Latin word amortizare, which means 'to kill'. In the context of finance, it refers to the 'killing' or reduction of a debt over time.
Related Terms
- Principal: The original sum of money borrowed in a loan, or put into an investment.
- Interest: The cost of borrowing money, typically expressed as an annual percentage of the loan.
- Loan: A sum of money that is borrowed, often from a bank, and has to be paid back, usually along with an additional amount of interest.
- Debt: An amount of money borrowed by one party from another.
- Mortgage: A loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan.
See Also
External links
- Medical encyclopedia article on Amortization
- Wikipedia's article - Amortization
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