An amortizing loan is a loan that has scheduled payments which are comprised of both principal and interest. Over time the loan’s principal balance declines and so the interest obligation declines. Amortization is often calculated on a “mortgage style” basis where the regular payment is fixed with the principal amount within the monthly payment increasing with each payment until the loan is fully repaid. Interest-only or “balloon” loans have no amortization and so all principal is due at the maturity of the loan. Relates to debt.

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