Amortisation
Private Credit glossary · Loan Structures & Instruments
Definition
Systematic repayment of debt principal over time; also, the gradual write-off of intangible assets.
Amortisation in plain English
Amortisation is just paying off a debt a little at a time so it steadily shrinks to zero, instead of owing the whole lump sum at the very end. Think of a car loan where each monthly payment chips away at what you borrowed (the 'principal'), so the debt melts down month by month. The word has a second, related use in accounting: spreading the cost of something you can't touch — like a patent or a brand — across the years it's useful, rather than counting it all as an expense on day one. Both meanings share the same idea: take one big number and dissolve it gradually over time.
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