Explore commonly used personal finance terms.
An amortization schedule details each loan payment’s allocation toward interest and principal over the loan term, allowing borrowers to understand how their payments reduce the principal balance over time. It includes periodic payments, remaining principal, and interest paid per period, commonly used in mortgage and car loans. By reviewing the schedule, borrowers see how long it will take to pay off a loan, the interest costs, and how extra payments affect loan duration and interest savings.
