Amortization

Amortization -  An amortized loan is a loan with scheduled periodic payments that consist of both principal and interest. An amortized loan payment pays the relevant interest expense for the period before any principal is paid and reduced. This is opposed to loans with interest-only payment features or “balloon” principal payment terms at the final maturity.  Amortization is often calculated “mortgage style” where the regular payment is the same, the principal amount increases with each payment until the loan is fully paid on the final scheduled payment.