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Understanding Balloon and Amortized Loans
An amortized loan is a type of financing where you pay off the loan over a set period with equal monthly payments. Each payment is split between interest and the loan principal. Over time, more of your payment goes toward the principal, reducing the interest you owe. This structure helps you manage your budget as you know exactly how much you need to pay each month, and you can also make extra payments to reduce the total interest paid over the life of the loan.