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In the context of debt or loans, for example, amortization refers to how the principal portion of the debt is paid down over time.

There can be many different types of amortization including fixed payment (interest + principal remains constant, but the mix between the two shifts toward more principal), bullet amortization (all principal is paid at the maturity of the debt with interest only payments prior to maturity) and many, many others depending on the needs of the borrower and lender.

From an accounting perspective, amortization can also refer to an annual charge made in a company's profit and loss account to reduce the value of an intangible asset to zero over a period of years.

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