Amortisation
Amortisation is the repayment of a debt through fixed regular payments, each covering the interest due first and putting the rest toward the principal, so the balance reaches zero with the final payment.
An amortising loan is built so that one fixed payment, repeated for the whole term, lands the balance at exactly zero on the final due date. Mortgages, car loans and most personal loans work this way. The payment is set by three inputs and nothing else: the amount borrowed, the periodic rate and the number of periods. The word is spelled amortization in American English and means the same thing.
Each period the lender charges interest on the balance outstanding right then, and whatever the payment does not spend on interest reduces that balance. Because the balance is largest at the beginning, the interest share is largest at the beginning too and falls every period afterward, while the principal share rises to match. The row-by-row table of that shift is the amortisation schedule, and the loan payment calculator builds one.
Two things get confused with it. The accounting sense of the word, spreading the cost of an intangible asset across its useful life, is a separate idea that happens to share a name. And an amortising loan is not an interest-only one: an interest-only payment covers the interest and nothing more, so the balance at the end of the period is the balance it started with. Refinancing an amortising loan restarts the schedule at its interest-heavy beginning, which is the part people underestimate.