Which term is the total amount borrowed originally, before any repayments or interest?

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Multiple Choice

Which term is the total amount borrowed originally, before any repayments or interest?

Explanation:
The amount originally borrowed is called the principal. It’s the base used to calculate interest, and it’s the sum you must repay (in addition to interest) over the life of the loan. The loan term is how long you have to repay, collateral is anything pledged to secure the loan, and the interest rate is the cost of borrowing expressed as a percentage. For example, if you borrow 5,000, that 5,000 is the principal; with interest, your total payments will exceed that amount, and each payment first covers interest and then reduces the principal. The remaining balance on the loan is the outstanding principal, not the total amount paid.

The amount originally borrowed is called the principal. It’s the base used to calculate interest, and it’s the sum you must repay (in addition to interest) over the life of the loan. The loan term is how long you have to repay, collateral is anything pledged to secure the loan, and the interest rate is the cost of borrowing expressed as a percentage. For example, if you borrow 5,000, that 5,000 is the principal; with interest, your total payments will exceed that amount, and each payment first covers interest and then reduces the principal. The remaining balance on the loan is the outstanding principal, not the total amount paid.

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