What is principal?

Principal

The principal is the amount borrowed, or the amount still owed, not counting interest (definition, opens in a new tab). On a car loan, it's the price minus the down payment and trade-in. Each monthly payment covers that month's interest first, and whatever is left lowers the principal.

Where does this site use it?

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Related terms

• Interest
• APR (annual percentage rate)

General education, not financial advice.