Principal

In a loan, the principal is the amount you actually receive and must pay back. If you borrow 15,000 for a car, the principal is 15,000. Interest is charged on top of it, so you repay more than 15,000 in total.

As you make loan payments, each payment is usually split between interest and principal. Early in a long loan, much of each payment goes to interest. Later, more of it reduces the principal. The amount of principal still owed at any time is called the outstanding balance.

In savings and investments, the principal is the amount you originally put in. If you deposit 5,000 in an account and it earns interest of 200, the principal is still 5,000 and the balance is 5,200.

Making extra payments that go directly towards the principal reduces the balance faster, which lowers the interest charged in later periods and can shorten the life of a loan. For investments, "protecting the principal" means avoiding losses on the amount originally invested.