When a loan is amortized, a relatively low percentage of the payment goes to reduce the outstanding principal in the early years, and the principal repayment's percentage increases in the loan's later years.

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This is because the interest portion of the payment is higher in the early years, and as the outstanding principal reduces over time, the interest portion decreases, allowing more of the payment to be applied towards the principal.

When a Loan Is Amortized, a Relatively Low Percentage of the Payment