Amortisation - What is amortization and how does it work?

Q: What is amortization and how does it work?

Amortization is the process of spreading out a loan into a series of fixed payments. The loan is paid off at the end of the payment schedule. Some of each payment goes towards interest costs and some goes toward your loan balance. Over time, you pay less in interest and more toward your balance.

Answer

Amortization is the method of paying off a loan over time by dividing it into set installments. At the conclusion of the repayment period, the loan is repaid in full. Your loan debt and interest both get a portion of each payment. Eventually, you will pay off your amount more quickly and pay less in interest.

Amortisation - What is amortization and how does it work?

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