loan-amortization

Vocabulary Word

Definition

If you've ever taken a loan to buy something pricey, like a car or house, 'loan amortization' is your repayment schedule. It's a plan that lays out how much you'll pay over the loan's life, including both the original amount and any interest.

Examples in Different Contexts

For mortgage lending, 'loan amortization' details how a home loan is gradually paid off over time. A mortgage broker might explain, 'Your monthly payment initially goes more towards interest, but over time, a larger portion will reduce the principal balance.'

Practice Scenarios

Business

Scenario:

We need to reduce the outstanding loans on our company's books. Proper planning could help us better manage these debts.

Response:

We can create a detailed loan amortization plan to effectively manage and reduce our debts.

Accounting

Scenario:

It's essential we allocate the right resources to all company expenses, including the repaying of outstanding loans.

Response:

I agree must devise a loan amortization schedule to ensure proper allocation for loan repayments.