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What is amortization?
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Answer Posted / k2
Technically, amortization refers to ANY practice of taking a
larger sum and reducing it by increments over a certain
period of time. Such as, but not limited to, repayment of
debt(loans, mortgages)or capital expenses (on tangible,
intangible assets). To my knowledge, the practice was
introduced after the Great Depression when most debts were
balloon payments with simple interest and cause many houses
to be lost to foreclosure when balloon payments became due
with no capital to back them, hence causing foreclosure.
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