Amortized Loan


DEFINITION of 'Amortized Loan'

A loan with scheduled periodic payments of both principal and interest. This is opposed to loans with interest-only payment features, balloon payment features and even negatively amortizing payment features.

BREAKING DOWN 'Amortized Loan'

Borrowers who choose amortized loans are less likely to experience "payment shock" than borrowers who choose loans which are not fully amortized. Payments on loans that are not initially fully amortized must at some point become amortized over the remaining term of the loan in order to repay the outstanding principal balance. The shorter the remaining term, the larger the increase required in the periodic payments to amortize the loan over the remaining term.

  1. Amortization Schedule

    A complete schedule of periodic blended loan payments, showing ...
  2. Payment Shock

    The risk that a loan's scheduled future periodic payments may ...
  3. Negatively Amortizing Loan

    A loan with a payment structure that allows for a scheduled payment ...
  4. Mortgagor

    An individual or company who borrows money to purchase a piece ...
  5. Deferred Interest

    The amount of interest that is added to the principal balance ...
  6. Negative Amortization

    An increase in the principal balance of a loan caused by making ...
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