When the loans are amortized, the monthly payments of the loan are constant, indeed the interest amount decreases, and the principal portion covered in the monthly payment increases.
What is loan amortization?
Loan amortization refers to the process of scheduling fixed-rate loans into equal monthly payments. The payments consist of two portions, principal and interest.
As the loan amortizes, the interest portion of the payment reduces, and the principal factor increases. Even the payment amount is constant throughout the amortization.
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