What is loan amortization?
Loan amortization is the structured repayment of a loan in fixed installments over time. Each installment has an interest part and a principal part.
Definition
An amortization schedule shows month-by-month loan repayment details including opening balance, EMI, interest paid, principal repaid, and closing balance.
Example
For a 20-year home loan, your EMI may stay fixed, but interest paid is higher in early years and principal repayment increases later.
Use case
Use amortization to understand total interest cost, compare tenure options, and decide if prepayment can reduce total loan expense.