What Is Amortization?

By Kristi Waterworth – Updated Aug 6, 2025 at 8:22 PM

Key Points

Amortization spreads intangible asset costs over their useful lives for financial reporting.
Loan amortization involves paying higher interest initially, increasing principal payments over time.
Understanding both amortization types aids investors in assessing company value and loan structures.

Amortization is an important concept, whether you’re looking at your household finances or the financials of a large corporation in which you’re considering an investment. Understanding amortization and how it works can help you better understand the long-term picture of either one.

Loading paragraph...

Three people sitting at a document-covered table in a home office and discuss information on a laptop screen. — Image Source: Getty Images

Loading image...

Loading paragraph...

Loading pitch...

Loading paragraph...

Research and Development (R&D)

The researching and developing of new products and services for a business.

Loading definition...

Loading paragraph...

How to Invest in New York Life Insurance

Buying New York Life Insurance stock is impossible because it's a mutual insurance company. Here's what that means.

GAAP vs. Non-GAAP: Everything You Need to Know

Public companies must use generally accepted accounting principles but also at times do their own thing.

7 Ways to Invest $1,000

Four figures can produce some great returns if invested in the right places.

Loading hub_pages...

Loading paragraph...

Loading pitch...

About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

TMFMaldivesBlue

@MaldivesBlues

The Motley Fool has a disclosure policy.