# What is the principal of a loan?

A loan is an amount that a person borrows from a bank or a financial authority to fulfill their needs.

## Answer: A loan principal is an amount the borrower agrees to pay the lender when the loan becomes due, not including interest.

Simple interest is a quick and easy method to calculate interest on the money, in the simple interest method interest always applies to the original principal amount, with the same rate of interest for every time cycle.

**Explanation: **

The principal is the amount that was initially borrowed from the bank or invested. The principal is denoted by *P.*

Simple interest is calculated on the principal of the loan and also account holder will gain interest on the principal.

### Therefore, the principal is the amount that was initially borrowed from the bank or invested.

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