An amortising loan is a type of loan that is repaid through regular, scheduled payments over a set period of time.
Each payment made on the loan covers both the interest due and a portion of the loan’s principal. Early in the loan term, a larger share of the monthly payment goes toward interest, while later payments contribute more heavily toward reducing the principal.
This gradual reduction in the outstanding loan balance continues until the loan is fully paid off by the end of the term.
Mortgages, auto loans, and personal loans are common examples of amortising loans. Amortisation schedules help borrowers understand how much they owe and when.