Question

What does it mean to amortize a loan?

Answer 1

usually means establishing a series of equal monthly payments that will provide

a principal payment that will cause the unpai principal balance to decrease each month so that the principal balance will be zero at the time of the final payment

Answer 2

To amortize a loan refers to equal and periodic payments (monthly in most of the cases), on which the lender runs some interest ratio due to the amortization.

In other words, it means that the total amount of money the lender is going to "give" you is divide in smaller amount of moneys, which he is gonna lend you periodically, monthly. For example, if you need a $60,000 loan, and your lender propose to lend that money with a 4% of annual interest, that means he is gonna give your $1771.4 per month, he won't give you the whole money, instead he amortize the loan and give your a certain quantity based on the interest rate.