Amortization

Business, Legal & Accounting Glossary

Definition: Amortization



What is the dictionary definition of Amortization?

Dictionary Definition


n. a periodic payment plan to pay a debt in which the interest and a portion of the principal are included in each payment by an established mathematical formula. Most commonly it is used on a real property loan or financing of an automobile or other purchase. By figuring the interest on the declining principal and the number of years of the loan, the monthly payments are averaged and determined. Since the main portion of the early payments is interest, the principal does not decline rapidly until the latter stages of the loan term. If the amortization leaves a principal balance at the close of the time for repayment, this final lump sum is called a “balloon” payment.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/amortization/
Modern Language Association (MLA):
Amortization. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. November 27, 2020 https://payrollheaven.com/define/amortization/.
Chicago Manual of Style (CMS):
Amortization. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/amortization/ (accessed: November 27, 2020).
American Psychological Association (APA):
Amortization. PayrollHeaven.com. Retrieved November 27, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/amortization/

Definition Sources


Definitions for Amortization are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th April, 2020 | 0 Views.