What is an amortization schedule?

• A. A calendar of monthly payment due dates.
• B. A chart of property tax payments.
• C. A table showing the breakdown of principal and interest in each payment as well as the balance.
• D. A record of total loan interest accrued over the life of the loan.

Answer: (C)

An amortization schedule is a table that shows, for every loan payment, how much of that payment goes to reducing the loan principal and how much covers the interest, along with the remaining loan balance after that payment. This format reveals exactly how the loan is paid down over time: interest is charged on the outstanding balance, so early payments are mostly interest and the principal portion grows over time. The schedule also shows when the loan will be fully paid off. It’s not just a calendar of due dates, a chart of property tax payments, or a simple record of total interest; those elements don’t provide the month-by-month breakdown of principal versus interest and the evolving balance that characterizes an amortization schedule.