Amortization
✓ Last verified 14 Sep 2026
The short version
Amortization is the process of paying off a loan through regular instalments that cover both interest and principal, with the interest-to-principal mix shifting over the loan's life.
An amortization schedule lays out every instalment of a loan's life, showing exactly how much of each payment goes to interest versus principal. Early in a loan, interest dominates each instalment since it's calculated on a still-large outstanding balance; later, principal dominates as the balance shrinks - all while the instalment amount itself typically stays constant. See our article on how EMI actually works for the full mechanics and why this pattern makes early prepayment disproportionately valuable.
Want this worked out for your own numbers?