Principal Balance
The remaining amount of a loan that's still owed, not including any interest, at a given point in time.
As payments are made on an amortizing loan, a portion goes toward reducing the principal balance while the rest covers accrued interest, and the principal balance is what interest is calculated against going forward.
Knowing the current principal balance, separate from the total remaining payments, is essential for understanding the real cost of paying off a loan early or refinancing it into new financing.
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