Amortisation is the process of spreading the repayment of a loan, or the cost of an intangible asset, over a specific timeframe. This is usually a set number of months or years, depending on the conditions set by banks or copyright agencies. Amortisation will often incur interest payments, set at the discretion of the lender.
The amortization concept is also used in lending, where an amortization schedule itemizes the beginning balance of a loan, less the interest and principal due for payment in each period, and the ending loan balance. The amortization schedule shows that a larger proportion of loan payments go toward paying off interest early in the term of the loan, with this proportion declining over time as more and more of the loan’s principal balance is paid off. This schedule is quite useful for properly recording the interest and principal components of a loan payment.
|We Recommend Testbook APP|
|100+ Free Mocks For RRB NTPC & Group D Exam||Attempt Free Mock Test|
|100+ Free Mocks for IBPS & SBI Clerk Exam||Attempt Free Mock Test|
|100+ Free Mocks for SSC CGL 2021 Exam||Attempt Free Mock Test|
|100+ Free Mocks for Defence Police SI 2021 Exam||Attempt Free Mock Test|
|100+ Free Mocks for UPSSSC 2021 Exam||Attempt Free Mock Test|