Simple Definition of amortize
business : to pay money that is owed for something (such as a mortgage) by making regular payments over a long period of time
Full Definition of amortize
1 : to pay off (as a mortgage) gradually usually by periodic payments of principal and interest or by payments to a sinking fund
2 : to gradually reduce or write off the cost or value of (as an asset) <amortize goodwill> <amortize machinery>
Did You Know?
When you amortize a loan, you "kill it off" gradually by paying it down in installments. This is reflected in the word's etymology. Amortize derives via Middle English and Anglo-French from Vulgar Latin admortire, meaning "to kill." The Latin noun mors ("death") is a root of "admortire"; it is related to our word murder, and it also gave us a word naming a kind of loan that is usually amortized: "mortgage." "Amortize" carries a different meaning in the field of corporate finance, where it means to depreciate the cost or value of an asset (as, for example, to reduce interest revenue on that asset for tax purposes).
Origin of amortize
Middle English amortisen to kill, alienate in mortmain, from Anglo-French amorteser, alteration of amortir, from Vulgar Latin *admortire to kill, from Latin ad- + mort-, mors death — more at murder
First Known Use: 1867
Legal Definition of amortize
: to reduce (an amount) gradually: as a : to pay off (as a loan) gradually usually by periodic payments of principal and interest or payments to a sinking fund b : to gradually reduce the cost of (as an asset) especially for tax purposes by making periodic charges to income over a time span <amortize the machinery over five years> — see also depreciation — compare capitalize, deduct
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