Definition:
The gradual settlement of a debt in which the debtor gives the creditor regularly scheduled payments over a predetermined amount of time. These payments are structured so that each payment simultaneously pays off accrued interest as well as a portion of the principal so that the loan is fully paid off over the loan period. With a fixed-rate loan the payments are predetermined and predictable. With an adjustable rate, payment sizes will fluctuate depending on the current interest rate being charged.
