amortization etymology

Etymology

The word "amortization" comes from the French word "amortir," which means "to deaden" or "to extinguish." It is derived from the Latin word "mortuus," which means "dead."

Meaning

Amortization refers to the gradual repayment of a debt over a period of time. It typically involves making regular fixed payments that consist of both interest and principal. As the principal is repaid, the amount of interest owed decreases, resulting in a lower total cost of borrowing.

Origin

The concept of amortization has been used for centuries in various forms.

• Ancient Greece: Lenders would often charge interest on loans and require borrowers to repay the debt in installments.
• Ancient Rome: The term "amortization" was used to describe the repayment of debts to creditors.
• Medieval Europe: Mortgages and other long-term loans were common, and amortization schedules were used to determine the monthly payments.

In modern finance, amortization is a standard practice for loans such as mortgages, auto loans, and personal loans. It provides borrowers with a structured plan to pay off their debt over a predetermined period, ensuring that the loan is extinguished by its maturity date.

amortization relate terms

• amortize

  Etymology French amortir Latin ad to mortuus dead Meaning To extinguish or

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• amortization

  Etymology The word amortization comes from the French word amortir which means to d

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