Which long-term debt type is typically amortizing?

Which long-term debt type is typically amortizing?

• A. Revolver
• B. Second lien
• C. Amortizing Term Loan
• D. Bridge loan

Answer: (C)

Amortization means paying down principal over time through regular payments that include both interest and principal. A loan that is designed to amortize has a fixed schedule where the outstanding balance declines each period until it’s fully paid off. Among the options, the loan type that fits this description is a term loan structured to repay portions of the principal over the life of the loan, not just interest. This creates a predictable decline in debt and interest expenses over time. A revolving credit facility isn’t amortizing because you can borrow, repay, and re-borrow at will, with no fixed principal repayment schedule. A bridge loan is short-term and typically interest-only, with a lump-sum repayment at maturity. Second lien loans can be structured in various ways, but the standard long-term amortizing structure is the amortizing term loan.

Amortization means paying down principal over time through regular payments that include both interest and principal. A loan that is designed to amortize has a fixed schedule where the outstanding balance declines each period until it’s fully paid off. Among the options, the loan type that fits this description is a term loan structured to repay portions of the principal over the life of the loan, not just interest. This creates a predictable decline in debt and interest expenses over time.

A revolving credit facility isn’t amortizing because you can borrow, repay, and re-borrow at will, with no fixed principal repayment schedule. A bridge loan is short-term and typically interest-only, with a lump-sum repayment at maturity. Second lien loans can be structured in various ways, but the standard long-term amortizing structure is the amortizing term loan.