What is the term for paying off a loan over time?

Amortization refers to the process of gradually paying off a loan over time through a series of scheduled payments. These payments typically include both principal and interest, allowing the borrower to reduce the outstanding balance of the loan over time. Amortization is commonly used in context with mortgages, where homeowners make monthly payments that decrease the principal balance while covering interest expenses.

In financial terms, amortization reflects a structured approach to debt repayment, resulting in completely paying off the loan by the end of its term. This is a crucial concept in real estate financing, where understanding how payments are allocated can help borrowers plan their finances effectively.

The other concepts mentioned, such as "installment," refer to a form of payment made at scheduled intervals, but it is not specifically a term that encompasses the entire process of paying off a loan. "Loan" is a broad term for borrowing money and does not imply the method of repayment, while "mortgage" specifically refers to a loan secured by real property. Amortization best captures the essence of the repayment process itself.