Amortize is a term that is commonly used in the world of finance and accounting. It is a term that is used to describe the process of spreading out the cost of an asset over a period of time. In this article, we will explore the definition and meaning of amortize, its origin, and its usage in different contexts.
According to the Merriam-Webster dictionary, amortize means “to pay off (an obligation, such as a mortgage) gradually usually by periodic payments of principal and interest or by payments to a sinking fund.” In simpler terms, it means to gradually reduce the debt or cost of an asset over time.
The word amortize comes from the French word ‘amortir,’ which means ‘to kill off’ or ‘to extinguish.’ The term was first used in the context of accounting in the 1800s.
Meaning in different dictionaries
According to the Oxford English Dictionary, amortize means “to reduce or extinguish (a debt) by means of periodic payments.” The Cambridge Dictionary defines it as “to reduce a debt by making regular payments that include both interest and a part of the original loan.”
Amortize is commonly associated with loans, mortgages, and other financial obligations. It is also used in accounting to refer to the process of depreciating an asset over time.
Some synonyms of amortize include pay off, reduce, retire, liquidate, and extinguish.
Some antonyms of amortize include increase, accumulate, and escalate.
The same root words
Some words that have the same root as amortize include amortization, amortizable, and amortized.
- We will amortize the cost of the new equipment over the next five years.
- The mortgage will be amortized over a period of 30 years.
- The company decided to amortize the cost of the new software over three years.
- The accountant recommended that we amortize the cost of the new building over a period of 20 years.
- The loan will be fully amortized after 10 years of regular payments.