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Principal Payment
Updated
January 19, 2023
The principal payment is essentially a payment that goes toward repaying the original amount of money borrowed in a loan. On the other hand, interest is a cost you pay to borrow money that is often calculated as a percentage of the loan's yearly value. As a result, when you make a principal payment, you reduce the amount of loan you must repay but not the amount of interest charged on that loan.
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