What Is the Principal of a Loan?

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Loans terms can be confusing. But understanding them is key to knowing how your loan works and how you’ll be charged. Loan principal is the amount of money you initially borrow. It differs from the loan balance and the interest rate.

Here’s what you need to know about your loan principal, along with other important terms, and how to find the information on your monthly statement.

Loan principal vs. loan interest

When taking out a personal loan, your loan principal is the initial amount that you borrow from a lender. You pay back the loan principal over time, plus interest.

Loan interest is a fee you pay to borrow money. The interest rate may be fixed or variable (meaning it changes over time), but the actual amount you pay in interest depends on your loan balance. Your loan balance and your loan principal are the same until you make your first payment. As you pay down your loan’s principal, the amount you still owe is your loan balance, which includes your total interest.

Paying back your principal

When you take out a personal loan, you’ll be responsible for paying back your principal and the interest that your loan has accrued.

Each month, when you make a loan payment, a portion of your payment will go toward paying off the loan principal and the rest will go toward interest. How each payment is allocated depends on factors like your loan amount, interest rate, and loan term.

Generally, more of your payment will go toward your loan’s interest than the principal in the early months of your loan. As the loan term progresses and your balance lessens, the interest you owe will also decrease, freeing up more of your payment to be directed toward the principal. This is commonly referred to as amortization.

Can I pay more toward the principal loan amount?

If you have extra funds available, paying more toward your loan principal might help pay off your loan faster and save on interest in the long run. Depending on if your lender allows extra payments, you may be able to direct 100% of that extra payment toward your principal, not interest.

For example: If you have a $25,000 personal loan with a 4.60% interest rate and a loan term of five years, and only make the minimum payment, you will have paid $28,033 in total at the end of five years. But if you make an extra payment of $200 each month, you will save $993 in interest and pay off your loan roughly a year and a half sooner.

If you intend on paying off your loan principal early, it’s important to know about prepayment penalties before you sign a loan contract. By doing so, you can avoid these fees altogether.

“Prepayment penalties are standard in the industry,” said Robin Simon, a partner at Easy Street Capital. “If you prepay the loan early, you’ll have to pay a fee equal to a low percentage of the outstanding loan balance, typically somewhere between 1% and 5%.”

Where to find your loan principal and total interest

Each month, your lender or bank will send you a statement that details your current loan balance, and how much you owe in interest and fees. Depending on the lender and your preferences, these statements are usually available both physically and digitally. You may need to reach out to your lender about your loan principal.

Some statements may break down how much of your payment goes toward the principal and interest, giving you a detailed overview of where your monthly payment is being allocated. If you have questions about your loan principal and total interest, it’s best to contact your lender directly.

Lender	Fixed rates	Loan amounts	Check rates
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	7.99% – 29.99% APR	$7,500 to $50,000	Check Rates
Fixed APR: 7.99% – 29.99% APR Min. credit score: Does not disclose Loan amount: $7,500 to $50,000 Loan terms (years): 2, 3, 4, 5 Time to fund: If approved, funds sent within 24-72 hours† Fees: Origination fee Discounts: No Eligibility: Available in all states except CO, CT, HI, KS, ND, NV, VT, WV, WI, and WY Customer service: Phone Soft credit check: Yes Min. Income: None Loan Uses: Debt consolidation, home improvement, wedding, travel, medical expenses, and other purposes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	9.95% – 35.99% APR	$2,000 to $35,000^**	Check Rates
Fixed APR: 9.95% – 35.99% APR Variable APR: N/A Min. credit score: 550 Loan amount: $2,000 to $35,000** Loan terms (years): 2, 3, 4, 5* Time to fund: As soon as the next business day (if approved by 4:30 p.m. CT on a weekday) Fees: Origination fee Discounts: Autopay Eligibility: Available in all states except HI, VT, MA, ME, NY, WV Customer service: Phone, email Soft credit check: Yes Loan servicer: Avant Loan Uses: Debt consolidation, emergency expense, life event, home improvement, and other purposes Min. Income: $1,200 monthly
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	7.99% – 15.19% APR	$10,000 to $50,000	Check Rates
Fixed APR: 7.99% – 15.19% APR Variable APR: N/A Min. credit score: 740 Loan amount: $5,000 to $50,000 Loan terms (years): 3 to 6 Time to fund: Next business day Fees: No prepayment penalty Discounts: None Eligibility: Available in all 50 states Customer service: Phone Soft credit check: Yes Min. Income: Does not disclose Loan Uses: Debt consolidation, home improvement, self-employment, and other purposes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	8.99% – 35.99% APR	$2,000 to $50,000	Check Rates
Fixed APR: 8.99% – 35.99% APR Variable APR: N/A Min. credit score: 600 Loan amount: $2,000 to $50,000 Loan terms (years): 2, 3, 4, 5 Time to fund: As soon as 1 to 3 business days after successful verification Fees: Origination fee Discounts: None Eligibility: Available in all states except DC, IA, VT, and WV Customer service: Phone Soft credit check: Yes Loan servicer: Best Egg and Blue Ridge Bank Min. Income: None Loan Uses: Credit card refinancing, debt consolidation, home improvement, and other purposes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	7.99% – 24.99% APR	$2,500 – $40,000	Check Rates
Fixed APR: 7.99% – 24.99% APR Min. credit score: 660 Loan amount: $2,500 – $40,000 Loan terms (years): 3, 4, 5, 6, 7 Time to fund: As soon as the next business day after acceptance Fees: Late fee Discounts: None Eligibility: Available in all 50 states Customer service: Phone Soft credit check: Yes Loan Uses: Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	11.25% – 24.5% APR	$5,000 to $40,000	Check Rates
Fixed APR: 11.25% – 24.5% APR Min. credit score: 640 Loan amount: $3,000 to $40,000 Loan terms (years): 2, 3, 4, 5 Time to fund: As soon as 2 to 5 business days after verification Fees: Origination fee Discounts: None Eligibility: Available in all states except MA and NV Customer service: Phone, email, chat Soft credit check: Yes Min. Income: $25,000 Loan Uses: Debt consolidation and credit card consolidation
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	9.57% – 35.99% APR	$1,000 to $40,000	Check Rates
Fixed APR: 9.57% – 35.99% APR Min. credit score: 660 Loan amount: $1,000 to $40,000 Loan terms (years): 3, 5 Time to fund: Usually takes about 2 days^† Fees: Origination fee Discounts: None Eligibility: Available in all 50 states Customer service: Phone, email Soft credit check: Yes Loan servicer: LendingClub Bank Min. Income: None Loan Uses: Debt consolidation, paying off credit cards, home improvement, pool loans, vacations, and other purposes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	7.99% – 35.99% APR	$2,000 to $36,500	Check Rates
Fixed APR: 7.99% – 35.99% APR Min. credit score: 600 Loan amount: $2,000 to $36,500 Loan terms (years): 2, 3, 4, 5, 6 Time to fund: As soon as the next business day Fees: Origination fee Discounts: Autopay Customer service: Phone, email Soft credit check: Yes Min. Income: $20,000 Loan Uses: Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	7.99% – 25.49% APR with autopay	$5,000 to $100,000	Check Rates
Fixed APR: 7.99% – 25.49% APR with autopay Min. credit score: 700 Loan amount: $5,000 to $100,000 Loan terms (years): 2, 3, 4, 5, 6, 7* Time to fund: As soon as the same business day Fees: None Discounts: Autopay Eligibility: Available in all states except VT Customer service: Phone, email Soft credit check: No Loan servicer: LightStream Min. Income: Does not disclose Loan Uses: Credit card refinancing, debt consolidation, home improvement, and other purposes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	18.0% – 35.99% APR	$1,500 to $20,000	Check Rates
Fixed APR: 18.0% – 35.99% APR Min. credit score: None Loan amount: $1,500 to $20,000 Loan terms (years): 2, 3, 4, 5 Time to fund: As soon as 1 to 2 business days after approval Fees: Origination fee Discounts: None Eligibility: Must have photo I.D. issued by U.S. federal, state or local government Customer service: Phone, email Soft credit check: Yes Min. Income: Does not disclose
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	8.49% – 17.99% APR	$600 to $50,000 (depending on loan term)	Check Rates
Fixed APR: 8.49% – 17.99% APR Min. credit score: 700 Loan amount: $600 to $50,000* Loan terms (years): 1, 2, 3, 4, 5 Time to fund: 2 to 4 business days after verification Fees: None Discounts: 0.25% reduction with use of AutoPay Eligibility: Does not disclose Customer service: Phone, email Soft credit check: No Min. Income: Does not disclose Loan Uses: Debt consolidation, home improvement, transportation, medical, dental, life events
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.99% – 35.99% APR	$3,500 to $40,000	Check Rates
Fixed APR: 5.99% – 35.99% APR Min. credit score: 640 Loan amount: $3,500 to $40,000 Loan terms (years): 2, 3, 4, 5 Time to fund: 90% funded within a day¹³ Fees: Origination Fee, $15 Late Fee, $25 NSF Fee Discounts: None Eligibility: Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories Customer service: Phone, email Soft credit check: Yes Loan servicer: Reach Financial Min. Income: $1,000 monthly Loan Uses: Debt consolidation, credit card refinancing
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	8.99% – 25.81% APR¹⁰	$5,000 to $100,000	Check Rates
Fixed APR: 8.99% – 25.81% APR¹⁰ Min. credit score: Does not disclose Loan amount: $5,000 to $100,000 Loan terms (years): 2, 3, 4, 5, 6, 7 Time to fund: 3 business days Fees: No fees required Discounts: Autopay Eligibility: Available in all states Customer service: Phone, email Soft credit check: Yes Min. Income: Does not disclose Loan Uses: Solely for personal, family, or household uses
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	11.69% – 35.99% APR⁷	$1,000 to $20,000	Check Rates
Fixed APR: 11.69% – 35.99% APR⁷ Min. credit score: 560 Loan amount: $1,000 to $50,000 Loan terms: 3, 5, or 7 years ⁸ Time to fund: Within one day, once approved⁹ Loan types: Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases Fees: Origination fee Discounts: Autopay Eligibility: A U.S. citizen or permanent resident; not available in DC, IA Customer service: Phone, email Soft credit check: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	8.49% – 35.99% APR	$1,000 to $50,000	Check Rates
Fixed APR: 8.49% – 35.99% APR Min. credit score: 600 Loan amount: $1,000 to $50,000* Loan terms (years): 2 to 7 Time to fund: Within a day of clearing necessary verifications Fees: Origination fee Discounts: Autopay Eligibility: Available in all 50 states and Washington, D.C. Customer service: Email Soft credit check: Yes Min. Income: Does not disclose Loan Uses: Debt consolidation, credit card refinancing, home improvement, and other purposes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	4.6% – 35.99% APR⁴	$1,000 to $50,000⁵	Check Rates
Fixed APR: 4.6% – 35.99% APR⁴ Min. credit score: 620 Loan amount: $1,000 to $50,000⁵ Loan terms (years): 3 or 5 years⁴ Time to fund: As soon as 1 – 3 business days⁶ Fees: Origination fee Discounts: None Eligibility: Available in all 50 states Customer service: Phone, email Soft credit check: Yes Min. Income: $12,000 Loan Uses: Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposes
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