||Amortization is the reduction of your debt through the monthly payments you make on your loan. Your payments are structured so that a part of each payment goes towards principal and the other part goes towards interest. At the beginning of your loan, more of your payment goes towards interest than towards principal. Towards the end of your loan, more of your payment amount is placed towards the principal balance of your loan. Once you make your final payment, your loan is fully amortized.