Amortization

Amortization is the process of paying down a loan balance through regular scheduled payments, each of which covers both interest and a portion of the principal. An amortization schedule shows the complete payment-by-payment breakdown over the life of the loan.

In Policy Stack, amortization applies to promissory notes where you are the lender receiving payments from a borrower. The amortization schedule shows:

• Payment number and date
• Payment amount
• Interest portion of each payment
• Principal portion of each payment
• Remaining balance after each payment

Policy Stack calculates the amortization schedule automatically when you enter a note's principal, interest rate, payment frequency, and start date. You then record actual payments received against the schedule to track collection status.

Note: amortization in Policy Stack describes note receivable amortization (income coming to you). Policy loans themselves do not have mandatory amortization schedules — that is the nature of policy loans.

Related terms: Promissory Note, Cash Flow, Net Return