What is the amount you borrow called?

The principal — the money that you borrow. The interest — this is like paying rent on the money you borrow.

What is the amount of money borrowed from a lender?

This amount is known as the principal; the lender determines the interest on the other by use of some internal underwriting frameworks as well as simple and compound interest formulas. Loans can be a one-off piece of finance, or they can be open-ended and subject to regulation and capping.

What do you call borrowing money from the bank?

Here’s how the loan process works. When someone needs money, they apply for a loan from a bank, corporation, government, or other entity. The lender advances the proceeds of the loan, after which the borrower must repay the amount including any additional charges such as interest. …

What is the term of the loan?

A loan term is defined as the length of the loan, or the length of time it takes for a loan to be paid off completely when the borrower is making regularly scheduled payments. These loans can either be short-term or long-term, and the time it takes to pay off debt from the loan can be referred to as that loan’s term.