What is a loan principal?

The initial amount you borrow when you accept money to purchase a car, a house, or education is referred to as the principal. It forms the basis upon which interest rates and repayment conditions are applied. It's the money you receive from the lender and must repay during the loan period along with interest and fees.

What is the principal of a bond?

The principal of a bond or other fixed-income investment is the amount the issuer agrees to pay back to the investor upon the bond's maturity. A bond's principal is also known as its par value or face amount because this amount was printed on the face of the bond itself back when bonds were issued on actual pieces of paper.

What is a principal in banking?

Principal. Principal can refer to an amount of money you invest, the face amount of a bond, or the balance you owe on a debt, distinct from the finance charges you pay to borrow. A principal is also a person for whom a broker carries out a trade, or a person who executes a trade on his or her own behalf. Dictionary of Financial Terms.