amortization

/əˈmɔrɾəzeɪʃɪn/

/əˈmɔtəzeɪʃən/

Other forms: amortizations

Amortization means a debt is being paid off by a series of payments. An amortization schedule for your car loan will show exactly how much you owe and how long it’ll take to pay it.

Amortization is fancy way to describe a payment plan: you gradually pay off a specific amount by making small payments according to a set schedule. Amortization takes place over a specific period of time. The root of amortization can be traced to the Middle English word amortisen, meaning “to kill.” In this case, it’s a debt that’s being killed off — slowly, over time. The word is often applied to car or home loans.

Definitions of amortization

1. noun

   the reduction of the value of an asset by prorating its cost over a period of years
   synonyms: amortisation

   type of:

   decrease, diminution, reduction, step-down

   the act of decreasing or reducing something
2. noun

   payment of an obligation in a series of installments or transfers
   synonyms: amortisation

   type of:

   defrayal, defrayment, payment

   the act of paying money