Principal

**Paragraph 1**

In finance, the principal is the original amount of money borrowed or invested, contrasted with interest, which is the additional amount of money paid over time. The principal is returned to the lender at the end of the loan term or investment period.

**Paragraph 2**

The principal can be a lump sum of money, or it can be paid in installments. In a loan, the principal is the amount of money that the borrower owes to the lender. The interest is the amount of money that the borrower pays to the lender for the use of the principal. The interest rate is the percentage of the principal that the borrower pays to the lender each year.

**Paragraph 3**

In an investment, the principal is the amount of money that the investor puts into the investment. The interest is the amount of money that the investor earns on the investment. The interest rate is the percentage of the principal that the investor earns each year.

**Paragraph 4**

The principal is an important concept in finance because it is the basis for calculating interest and other financial charges. The principal is also the amount of money that is returned to the lender or investor at the end of the loan or investment period.