repayment
Amortization
Amortization is the repayment of a loan through scheduled periodic payments that cover both principal and interest.
Last updated Reviewed by ICG Funding
Definition
What it means.
On a fully amortizing loan, each payment pays down some principal and some interest; by the final payment the balance reaches zero. Early payments are mostly interest; late payments are mostly principal.
Contrast amortization with interest-only periods (only interest paid, principal due at maturity) and balloon structures (small regular payments with a large final payment). Most SBA 7(a) and conventional term loans are fully amortizing.
Now what?
Get an offer that accounts for amortization.
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