Amortization has several meanings. In relation to loans, amortization is the process of paying down the loan by making payments which include both principal and interest.
Amortization is also related to the concept of depreciation. While depreciation expenses the cost of a tangible asset over its useful life, amortization deals with expensing an intangible asset or liability, like a mortgage.
An amortization schedule is often used to show the amount of interest and principal for a loan with each payment.
