What does "Minimal Amortization" suggest about a loan?

"Minimal Amortization" indicates that only a portion of the principal is repaid by the end of the loan term. This type of structure typically allows the borrower to pay lower amounts during the life of the loan, with a significant portion of the principal remaining outstanding until the end. As a result, this arrangement often leads to a large balloon payment or a final lump sum that must be paid at maturity.

This approach can be advantageous for borrowers who want to manage cash flow or prioritize other expenses during the initial period of the loan. However, it also means that the borrower will not fully pay off the loan through regular periodic payments, which can lead to higher financial obligations when the loan comes due. Hence, the core characteristic of minimal amortization is that it defers a substantial part of the principal repayment until the end of the term, making it distinct from loans that require full principal repayment or amortized payments throughout the loan duration.