A loan with fixed, equal, monthly payments, made up of principal and interest, and the amount owed (principal) is eventually paid off, describes as an amortized loan.
A loan that has planned, monthly payments that are applied to both the principal and interest accrued is known as an amortized loan. An amortized loan payment is one that reduces the principal amount of the loan after paying off the relevant interest expense for the period.
Auto, housing, and personal bank loans for small projects or debt consolidation are examples of common amortized loans. A loan that is amortized requires the borrower to make regular payments that are divided equally between the principle and interest.
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