For other uses of Amortization, see the Amortization disambiguation page.
Amortization is distribution of a single lump-sum cash flow into many smaller cash flow installments for easier repayment. Unlike other repayment models, each repayment installment consists of both principal and interest. Amortization is chiefly used in loan repayments and sinking funds. The payments are usually of equal amounts. In the case of a loan, a greater amount of the payment is applied to interest at the beginning, while during the latter portion, more money is applied to principal.
Accounting
In accounting, amortization also means the spreading of asset depreciation expenses over future time periods of intangible balance sheet items such as trademarks, copyrights, goodwill, or other deferred charges. Tangible asset depreciation is called depreciation.
Real estate
In real estate, it is also used to refer to a loan with such a repayment scheme.
See also
