In loan terminology, what does principal refer to?

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Multiple Choice

In loan terminology, what does principal refer to?

Explanation:
Principal is the original amount borrowed. It’s the money you agreed to repay before any interest or fees are added. The interest rate tells you how much extra you’ll pay for borrowing, and it applies to the remaining principal over time. Each payment usually covers both interest and a portion of the principal, so as you pay, the principal balance decreases. Fees charged by the lender are separate from the principal and are not the amount borrowed.

Principal is the original amount borrowed. It’s the money you agreed to repay before any interest or fees are added. The interest rate tells you how much extra you’ll pay for borrowing, and it applies to the remaining principal over time. Each payment usually covers both interest and a portion of the principal, so as you pay, the principal balance decreases. Fees charged by the lender are separate from the principal and are not the amount borrowed.

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