With reference to a loan, the principal is the

Question

Certilyst · Accepted Answer

A Rationale: The principal is the total amount of money borrowed. This term specifically refers to the original sum of money that is lent to the borrower, excluding any interest or fees.

Choice B is incorrect because it defines the borrower rather than the principal amount. The borrower is the individual or entity that receives the loan, not the money itself.

Choice C is wrong as it refers to lien theory, which is a legal concept related to the security interest in the property, not the principal amount of the loan.

Choice D is also incorrect since it describes the total amount paid by the borrower, which includes both the principal and any interest accrued over time. The principal specifically excludes these additional costs.

PSI National Real Estate License Exam Prep

With reference to a loan, the principal is the