Amortization defined as systematic repayment extinguishing indebtedness through periodic principal and interest payments under an amortization plan. Amortization historically signified transfer of lands into mortmain; modernly it denotes systematic repayment of indebtedness by periodic installments or a sinking fund. An amortization plan schedules partial payments of principal and accrued interest over a fixed term so that the entire indebtedness is extinguished at expiry.