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TeachMeFinance.com - explain principal Principal: the amount borrowed from a lender; doesn't include interest or additional fees. another definition... Principal -- The loan amount borrowed from a lender, not including interest or additional fees. another definition... principal -- (1) the capital sum of a loan. The amount of borrowed funds to be repaid. (2) an individual or firm buying or selling for his (her/its) own account. historic definition... Principal -- The capital sum upon which interest is payable ; also, the one who employs a broker or other agent. A principal is responsible for the act of an agent, but an agent who exceeds his authority renders himself personally liable. A person who has given money to his own agent to be delivered to his creditor cannot set up the claim that he has paid his creditor unless the money actually reaches the creditor. In other words, while the money is in the control of the agent of the debtor it is at the debtor's risk and it cannot be charged against the creditor any more than if it remained in the debtor's own hands. For additional information see Agent. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.