In finance, the term “principal” is used to denote the value of assets comprising a debt.

Example: When you get a 5000 Swiss franc personal loan, the principal of that loan is 5000 Swiss francs. As you pay off the loan, the principal decreases. When you buy a corporate bond for 1000 Swiss francs the principal of that bond is 1000 Swiss francs, meaning the company owes you 1000 francs plus possible interest.

When used in reference to bonds or medium term notes, the term "principal" refers to the debt owed by the borrower (a company or government agency) to the lender (the investor).

More on this topic:
Personal loan comparison
Business loan comparison
Online trading comparison
Medium term note comparison

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