Principal

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If you get a loan for $10,000 to buy a car, you will gradually repay the loan over the loan period while also making interest payments on the loan. The principal is the term for that original $10,000. The principal will be gradually reduced ( amortized) over the loan period. How quickly the principal gets reduced depends on the total length of time you have to repay and the interest rate you are being charged. When you repay a thirty-year mortgage, in the early years most of your repayments will be payments of interest rather than of the principal. Property or assets contained in a trust is also sometimes referred to as the principal.