What is amortization?
Amortization: Amortization is paying off a loan through regular, scheduled payments that cover both interest and principal, so the balance reaches zero by the end of the term.
With a typical amortizing loan, early payments go mostly toward interest. As the balance falls, a larger share of each payment goes toward principal.
An amortization schedule lists every payment and shows how much goes to interest and to principal. Lenders can usually provide one.
When you compare offers
Reviewing the schedule shows how much interest you would pay in total and how quickly the balance would fall on each offer.
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This glossary is for general educational purposes and isn't financial, legal or insurance advice. Lendara is not a lender and does not make credit decisions. Lendara is a free online marketplace that connects you with participating lenders and providers, who set their own eligibility rules, rates, fees and terms. Lendara may receive compensation from partners, which may affect which offers appear and their order.