ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Your principal is the amount that you borrow from a lender. The interest is the cost of borrowing that money. Your monthly mortgage payment may also include property taxes and insurance.

Detailed explanation-2: -Principal is the money that you originally agreed to pay back. Interest is the cost of borrowing the principal. Generally, any payment made on an auto loan will be applied first to any fees that are due (for example, late fees).

Detailed explanation-3: -Generally, when you make a loan repayment, your repayment pays down some of the principal balance as well as the interest accrued. This is known as principal and interest repayment. However, you may be able to choose to make interest only payments for a specific period, so you’re only paying interest charged.

Detailed explanation-4: -Principal + Interest payments In a principal + interest loan, the principal (original amount borrowed) is divided into equal monthly amounts, and the interest (fee charged for borrowing) is calculated on the outstanding principal balance each month.