Amortiment

Amortiment is a term used in finance and accounting to describe the gradual repayment of a debt, loan, or the cost of an intangible asset over a period of time. It involves making regular payments that cover both principal and interest. As payments are made, the outstanding balance of the debt decreases, and a portion of each payment is allocated to reduce the principal. Similarly, when amortizing an intangible asset, its cost is systematically expensed over its useful life.

The process of amortiment is typically structured through an amortization schedule. This schedule outlines each payment, detailing how much goes towards interest and how much reduces the principal. For loans, the interest portion is usually higher in the early payments and decreases over time, while the principal portion increases. This is known as a typical amortization pattern.

Amortiment is a crucial concept for understanding loan obligations, the value of long-term assets, and financial planning. It allows individuals and businesses to manage large financial commitments by spreading them out over manageable periods, making them more affordable and predictable. The term is often used interchangeably with loan repayment or depreciation for intangible assets.