What is principal amount?

Principal amount is the original amount of money, the amount before any interest is applied.

In the financial world, Principal is asssociated with anything that earns interest (like a savings account) or accrues debt like a credit card or car loan, debt that needs to be repaid. This debt could be for a car, a credit card, a mortgage, or anything else that could be financed.

Examples of Principal amount in a House Loan(Morgage)

If you buy house for $100,000 and use a loan from the bank to pay for all of it,then the principal amount is $100,000