What is the "principal amount"?

Answer by  Gambert4 (22)

The principal amount is the origianl amount of a loan or debt. Unless the loan is interest-free you will make a monthly payment on it. When you make a monthly payment, it is the part of the payment that reduces the outstanding balance of the origianl debt or loan; in other words, it excludes the interest.

Answer by  Robert53 (131)

When a bank loans money to an individual for a car, house or business, the bank makes a return on their investment by charging additional money over and above amount asked for. Additional charges are interest and/or finance fees. The principle amount is the amount requested, and all the rest represent interest and fees paid to the bank for profit.