Annuity in arrears

An annuity in arrears is a series of payments that are due at the end of each successive time period. For example, the periodic payments on a mortgage are usually paid in arrears. This type of payment schedule reduces the present value of the payments, since the payments are made later in time.

The reverse of an annuity in arrears is an annuity in advance, where payments are due at the beginning of each period.

Similar Terms

An annuity in arrears is also called an ordinary annuity.

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