amorterar

Amorterar is a Swedish term that translates to "amortize" in English. It refers to the process of gradually paying off a debt over time through a series of regular payments. These payments typically include both a portion of the principal amount borrowed and the interest accrued on the outstanding balance.

In the context of loans, such as mortgages or personal loans, amortization schedules are used to detail how each payment is applied. Over the life of the loan, the principal portion of each payment increases, while the interest portion decreases, assuming a fixed payment amount. This means that in the early stages of a loan, a larger part of the payment goes towards interest, and as the loan matures, more of the payment is applied to reducing the principal.

Amortization is a fundamental concept in finance and accounting. In accounting, amortization is also used to describe the systematic allocation of the cost of an intangible asset over its useful life. This is similar to depreciation, which applies to tangible assets. For example, the cost of a patent or software license might be amortized over a certain period. The purpose of amortization in both financial and accounting contexts is to spread costs or debt repayment over a defined timeframe, providing a structured approach to managing financial obligations or asset value.