The definition of amortization is the process of setting aside money to pay off a debt over time.
The yearly premium for car insurance divided into monthly payments is an example of amortization.
- an amortizing or being amortized
- money put aside for amortizing a debt, etc.also amor′tize·ment
- a. The act or process of amortizing.b. The money set aside for this purpose.
- In reckoning the yield of a bond bought at a premium, the periodic subtraction from its current yield of a proportionate share of the premium between the purchase date and the maturity date.
(countable and uncountable, plural amortizations)
- The reduction of loan principal over a series of payments.
- The distribution of the cost of an intangible asset, such as an intellectual property right, over the projected useful life of the asset.
amortization - Investment & Finance Definition
- An accounting technique that reduces the cost of an intangible asset, such as goodwill, by assessing the charge against income over a specific amount of time. For a tangible asset, such as machinery, the term depreciation is used.
- The act of reducing debt by making regular principal and interest payments.