How Do You Spell AMORTIZE?

1. Amortize is a financial term typically used in the context of loans or other liabilities, referring to the systematic repayment of a debt over a period of time. To amortize a debt means to make regular payments over a fixed schedule until the debt is fully paid off. This process ensures gradual reduction of the principal balance along with the associated interest charges.

   When a loan is amortized, the periodic payments are divided into both interest and principal components. In the early stages of repayment, a larger portion of the payment goes towards the interest, while a smaller fraction is allocated towards the principal. As the loan matures, the interest portion progressively decreases, and a larger fraction is applied towards reducing the principal balance. By the end of the amortization period, the entire principal amount would have been repaid.

   Amortization schedules are created to outline and track the repayment plan, clearly stating the amount of each payment, the interest charges, and the remaining principal balance after each payment. These schedules provide borrowers with a comprehensive overview of the loan terms and help them manage their finances effectively.

   Amortization is also used in accounting, where it refers to the systematic allocation of costs or expenses over a specific period, typically for intangible assets such as patents or copyrights.

Top Common Misspellings for AMORTIZE *

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Other Common Misspellings for AMORTIZE

The word "amortize" has its origins in the Latin term "admortire", which means "to kill" or "to die". This Latin verb eventually evolved into "amortire" in Old French, which meant "to diminish" or "to kill". Over time, it was further modified into "amortir" in Middle French, with a similar meaning of "to weaken" or "to lessen". In the financial context, the term "amortize" emerged in the early 19th century and referred to the gradual repayment of a debt, leading to the modern sense of spreading out payments over time to reduce the principal.

Similar spelling words for AMORTIZE

Conjugate verb Amortize

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