Repayment of a loan requires that the borrower make a monthly payment to the lender. With each monthly payment, you pay down a portion of the loan principal, as well as monthly interest on the outstanding balance. Loan payments are amortized so that the monthly payment remains the same throughout the repayment period, but during that time, the percentage of the amount that goes towards principal will increase as the outstanding loan balance decreases.
Related Content
Article
1.75
1.666665