Amortizing loan
From Wikipedia, the free encyclopedia
In banking and finance, an amortizing loan is a loan where the principal of the loan is paid down over the life of the loan, typically through equal payments. Each payment to the lender will consist of a portion of interest and a portion of principle. Mortgage loans are typically amortizing loans. The calculations for an amortizing loan are those of an annuity using the time value of money formulas.
An amortizing loan should be contrasted with a bullet loan, where a large portion of the loan will be paid at the final maturity date.
