If you have ever stepped in a bank for taking a loan, you must have inquired about the terms ‘ principal amount’, ‘closing balance’ , administrative fee etc. I was the same as you, confused about the principal amount meaning. Until then, I understood how simple it was.
Keep reading to know more.
What is principal amount in loan ?
In simple terms, it is the initial sum or size of loan that has been borrowed from the bank. It is also referred to as the amount still owed on a loan.It is the amount of money initially borrowed from the lender( bank) and as the loan is repaid, it can also refer to the amount of money still owed.
The principal amount of loan is added along with interest to ask the customers to repay their loans.This principal amount is found on loans of various types, be it personal loan, loan against property, commercial loan etc.
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eg. If I take a loan for Rs.50,000, the principal loan will be Rs50,00)(money that you originally agreed to pay back). Remember, the principal amount does not include capitalised interest or any extra charges/fee.
Usually, the term principal sum is used as a synonym for principal loan. If you have more questions about what is principal amount meaning. Keep an eye here!
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Authors Of The Question
What is principal amount in loan ?
Vrinda
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1 Answers
2 Year
2022-03-07T19:58:44+00:00 2022-03-07T19:58:45+00:00Comment
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