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Spreading payments over multiple periods for debts or costs.

Business Glossary provided by
Amortization is the financial practice of spreading out a lump sum cost (or debt) across multiple time periods. This is done for debt repayment or to account for the declining value of an intangible asset. With loans, it allows for consistent repayment scheduling that includes interest and principal over the loan’s life. For intangible assets, amortization helps spread the cost of the asset over its useful life for accounting purposes.
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