Principal

Principal is the amount of money that a borrower must put down to secure a car loan. Amount borrowed from a lender, which is what you owe them back in total.

As you continue to make monthly car payments, the principal balance will be reduced. Because of amortisation, the amount of interest paid decreases over the life of a loan, resulting in an increase in principal payments. The principal amount is used to calculate your interest rate.

DOWNLOAD THE APP

Start rounding up and saving to pay down your car loan faster