You can say it "treats" it that way -- but the fact is that if you borrow $100,000 over 20 years, after the first payment you still have $99,999.99 of my dollars (I didn't do the math; the point is "essentially all"). So it seems fair that, while you still have most of my $100k, I should still get most of the payment as interest. Whereas just before the last payment, you only still have a tiny amount of my money, so it's completely fair that that last payment consists of the last principal you owe me plus only a tiny amount of interest.