A loan with the kind of self-control deficit you sometimes see in monkeys or small children. Like, "Reggie, we're in public...stop amortizing yourself."
Actually, it's nothing as shameful as that. Instead, the self-amortizing loan is one where the principal and interest are broken up into regular payments (usually monthly). Once all the payments are made, the loan is paid back; the interest and principal are both included in the payment schedule.
Typically, a mortgage works like this: make your payments every month and, at the end of 30 years (or 15 years, or whatever the term of your mortgage happens to be), everything is squared away. The alternative to this is something like the interest-only mortgage. In this formulation, the interest gets paid off, but the principal remains unpaid. Or a loan can be structured to have regular payments for a period of time, followed by a balloon payment at some point.
These won't happen with a self-amortizing loan. It includes all principal and interest in its regular payments.
Related or Semi-related Video
Finance: What is Bond Amortization?7 Views
Finance a la shmoop what is bond amortization? okay fancy term easy
concept the basic idea is that you have to "revalue" what a bond is
actually worth each period which usually means twice a year because bonds pay [Monthly calendar appears]
interest on the you know semester system yeah twice a year so let's say you've
paid seven hundred bucks for a bond with a 5% coupon which comes due for a
thousand bucks in ten years over that time you'll have received two things the
5% per year interest from the bond in cash paid along the way and the [5% interest per year appears]
appreciation of the 700 bucks to become the thousand dollar par value at which
point it will eventually pay back its principal so to amortize the $300 of
appreciation of that bond over ten years while you could attribute 30 bucks a
year in appreciation each year such that after we'll say three and a half years
you'd hold the bond as having appreciated 3.5 times 30 bucks or $105 [Straight line appreciation formula appears]
in appreciation making the bond worth at that point in time eight hundred five
dollars oh yeah fancy but also pretty easy
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