Word of the Day

: June 25, 2018

amortize

verb AM-er-tyze

What It Means

1 : 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

2 : to gradually reduce or write off the cost or value of (something, such as an asset)

amortize in Context

"A standard three-year, 15,000-mile Momentum lease will run about $410 per month with the down payment amortized." — J. P. Vettraino, AutoWeek, 8 Jan. 2018

"A typical car factory costs between $500 million and $1 billion to build, and the tooling and machinery are amortized over many years, which is why they need to produce hundreds of thousands of vehicles per year to be profitable." — Alan Ohnsman and Joann Muller, Forbes, 12 Dec. 2017

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).