amortization

amortization — noun

1. an accounting method that records a long-term cost bit by bit across several per

1.nounC1
Definition

an accounting method that records a long-term cost bit by bit across several periods instead of taking the whole amount at once.

Example

The company spread the software cost through amortization over five years.

amortization over + period

During the June audit, Mia checked the patent's annual amortization entry.

amortization of + asset / cost

Common collocations
  • annual amortization
  • patent amortization
  • amortization of software costs
  • amortization over five years
Synonyms
  • depreciation

    similar accounting idea, but usually used for physical assets rather than patents or software

  • write-down

    broader; may be a one-time reduction rather than a planned spread across periods

  • cost allocation

    broader business term for assigning cost, not always for reducing book value over time

Grammar Patterns

amortization of + cost / asset

amortization over + period

Usage Note

Common with intangible assets, software costs, patent rights, and similar amounts carried in the accounts over several years. Distinguish from sense 2 (PAY OFF DEBT): here the amount falls because of accounting treatment, not because a borrower is sending cash payments.

Common Mistakes

The factory reported truck amortization this year.
The factory reported truck depreciation this year.
physical equipment is usually depreciated, while amortization is more often used for intangible assets or certain fees.

2. a plan for clearing a debt through fixed payments made over time until the amoun

2.nounC1
Definition

a plan for clearing a debt through fixed payments made over time until the amount owed reaches zero.

Example

The bank sent Mei a mortgage amortization schedule for twenty years.

mortgage amortization schedule

For her tea shop, Wen's monthly amortization kept the loan manageable.

monthly amortization

Common collocations
  • loan amortization
  • mortgage amortization
  • amortization schedule
  • monthly amortization
Synonyms
  • repayment

    broader; can refer to any act of paying a debt back

  • installment plan

    more everyday; emphasizes separate payments in a schedule

  • payment schedule

    broader; may describe timing without emphasizing the debt reaching zero

Antonyms
  • default

    the borrower stops making the required payments instead of reducing the debt

Grammar Patterns

amortization of + loan / debt

loan amortization

Usage Note

Usually appears with loan, mortgage, schedule, period, or payment. Distinguish from sense 1 (SPREAD COST): here money is actually paid to reduce the debt, not just recorded differently in the books.

Common Mistakes

The loan's amortization is one final payment next June.
The loan is due in one final payment next June.
amortization describes a series of payments over time, not a single lump-sum payoff.

Word family

  • amortize
    verbC1
  • amortized
    adjectiveC2

Synonym discussion

Sense: noun/2

For debt, amortization is the most technical of these words. It describes a structured reduction of what you owe through regular payments over time, often shown in a table or schedule. Repayment is broader and can mean any act of paying money back, even one early payment. Installment plan is more everyday and focuses on separate payments from the customer's point of view. Payoff often points to the final act of clearing the debt, or the total needed to close it. A bank sends an amortization schedule for a mortgage, but a friend simply repays a small loan. A sofa may be bought on an installment plan, and the payoff comes with the last bill.

amortization ↗repaymentinstallment planpayoff

Common collocations

Nouns

  • amortization period
  • amortization method

Phrases

  • full amortization
  • amortization over ten years

Prepositions

  • amortization of
  • amortization over

Etymology

LatinOld FrenchMiddle EnglishEnglish

Amortization comes from amortize, a word that reached English through Middle English and Old French from a root linked to death or killing off. In finance and accounting, the image is that a debt or recorded cost is gradually "killed off" until nothing remains.