Amortized Meaning: Definition, Examples, and Translations
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amortized
[æˈmɔːrtaɪzd ]
Definition
finance, accounting
Amortized refers to the gradual reduction of a debt or an asset's value over time through scheduled payments or depreciation. In the context of loans, amortized payments allow borrowers to pay off their principal along with interest in a structured manner. This means that with each payment made, the total amount owed decreases systematically. Amortization schedules are often used to outline the timing of these payments and the allocation between interest and principal amounts.
Synonyms
discounted, liquidated, repaid.
Examples of usage
- She made amortized payments on her mortgage.
- An amortized loan has predictable monthly payments.
- The company reported its amortized costs for the fiscal year.
Translations
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Origin of 'amortized'
The term 'amortized' originates from the Latin word 'amortizare', which means 'to kill' or 'to extinguish.' The concept refers to the gradual extinguishment of a debt or obligation. Initially used in the context of settling debts or liabilities, the term evolved to encompass not only the repayment of loans but also the systematic allocation of costs and financial obligations over time. In the English language, 'amortize' started being adopted in the early 17th century, gaining prominence in financial discourse. The practice of amortization became a fundamental aspect of modern finance, especially with the rise of home mortgages and corporate financing options in the 19th and 20th centuries. Today, the concept is widely utilized in accounting, lending, and investment analysis.