The English Corner Term of the Week

Amortization /əˌmɔːtaɪˈzeɪʃən/:

Word formation: amortiz (root, verb) + ation (suffix for nominalization)

1. [noun, countable] The process of amortizing a debt[1]; loan[2] repayment. The paying off of debt with a fixed repayment schedule in regular installments[3] over a period of time.

Eg. Consumers will have to face the amortization of their mortgage[4].

1. [noun, uncountable] The money devoted to[5] amortizing a debt. 

Eg. EBITDA represents earnings before interest, taxes, depreciation and amortization.

1. [noun, uncountable] The spreading out of capital expenses for intangible assets^[6] over a specific period of time (usually over the asset’s useful life) for accounting and tax purposes. Amortization is similar to depreciation[7], which is used for tangible assets, and to depletion[8], which is used with natural resources.

Eg. The amortization of the fleet matches the revenue[9] they generate.

Quotation

In banking and finance, an amortizing loan is a loan where the principal of the loan is paid down over the life of the loan (that is, amortized) according to an amortization schedule, typically through equal payments. (http://en.wikipedia.org/wiki/Amortizing_loan) 

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[1] Debt: deuda

[2] Loan: préstamo

[3] Instalments: plazos

[4] Mortgage: hipoteca

[5] Devoted to: dedicado a

[6] Assets: activos, propiedades, beneficios

[7] Depreciation: depreciación , devaluación

[8] Depletion: disminución, agotamiento, merma

[9] Revenue: ingresos