The principal is the original amount of debt on which interest is calculated. Interest is the additional money paid above the principal, and the interest rate is the percentage of the principal charged as interest per year.
Principal refers to the original amount of debt on which interest is calculated. It is the amount borrowed or still owed on which interest is charged. For example, if you borrow [tex]$1,000, the principal is $[/tex]1,000.
Interest is the additional money paid to the lender above the principal. It is usually expressed as a percentage of the principal and is the cost of borrowing money. For example, if you earn [tex]$80 on lending out $[/tex]1,000, the interest is $80.
The interest rate is the percentage of the principal charged as interest per year. It determines how much interest you will pay on top of the principal amount borrowed.
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