Question 1

What does loan amortization mean?

Accepted Answer

Loan amortization is the process of gradually repaying a loan through regular payments over time, with each payment covering both interest and principal.

Question 2

How is amortization different from interest-only loans?

Accepted Answer

Amortized loans include both interest and principal in each payment, while interest-only loans cover only interest for a set period before principal repayment begins.

Question 3

What are the benefits of understanding amortization?

Accepted Answer

Understanding amortization helps borrowers estimate total interest, plan repayments, and make informed financial decisions when comparing loans.

Question 4

How can I calculate amortization easily?

Accepted Answer

You can calculate amortization easily using the FinzCalc Amortization Calculator, which provides a complete payment breakdown and loan schedule.

Question 5

Does making extra payments affect amortization?

Accepted Answer

Yes, making extra payments reduces the principal faster, shortens the loan term, and decreases the total interest paid.

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