What does the term "amortization" refer to in loan payments?

قرض کی ادائیگی میں اصطلاح "امورٹائزیشن" سے کیا مراد ہے؟

Accumulating interest on the principal amount

Calculating simple interest

Paying off debt with a fixed repayment schedule in regular installments

Calculating compound interest

Amortization refers to the process of gradually reducing a debt through regular loan payments.

It allocating a portion of each payment to interest and the remaining amount to the principal, until the loan is fully repaid.