amortisaatiokulu

Amortisaatiokulu, also referred to in English as amortization cost, denotes the charge applied to a repayment plan where the payment amount reduces over time, mirroring the decreasing loan balance. Unlike a fixed‑rate loan where each payment remains the same, amortization costs accelerate the repayment schedule, typically resulting in larger payments at the beginning and smaller ones later. This structure can benefit borrowers by reducing the total interest paid over the life of the loan, though it may strain early cash flow.

In Finnish financial practice, amortisaatiokulu often appears in small‑business financing and personal loans. When a lender offers an amortizing loan, the monthly payment is calculated using a formula that factors in the principal, the nominal interest rate, and the desired repayment period. The payment amount declines as the outstanding balance shrinks because interest is calculated on the lower remaining balance each month. Regulators in Finland require transparent disclosure of amortization schedules and the total amount of interest that will be paid, ensuring borrowers understand the cost dynamics.

Amortization costs are distinct from interest because the interest portion is calculated on the diminishing balance, whereas the total payment includes a principal component that reimburses the lender’s capital. Borrowers worried about higher early payments may negotiate a longer repayment period or switch to a fixed repayment structure. Overall, amortisaatiokulu offers a more efficient repayment approach for borrowers who can manage the front‑loaded payments, leading to a shorter loan duration and lower cumulative interest costs.