What is the term for the process of paying off a debt with a fixed payment plan over time?

The term that refers to the process of paying off a debt with a fixed payment plan over time is loan amortization. This process involves making regular, scheduled payments that cover both the principal and interest of the loan. Each payment reduces the total debt until it is fully paid off by the end of the loan term.

Loan amortization is critical in understanding how loans work because it breaks down payments into manageable amounts and provides a clear timeline for debt elimination. It allows borrowers to track how much of the loan balance is being paid down with each installment, as well as how much interest they are paying over the life of the loan, providing clarity and transparency in financial planning.

Other options do not accurately describe this process. The interest rate pertains to the cost of borrowing money but does not refer to the repayment structure itself. Principal payment is simply a portion of the loan amount that is paid back and does not encompass the entire structure of scheduled payments. Fixed interest refers to a situation where the interest rate remains constant throughout the life of the loan, but it does not define the repayment process that includes both principal and interest over time.