What is the term for the amount of money you borrow?

The term that refers to the amount of money you borrow is "principal." This is the actual sum of money that is loaned to you and does not include interest or any additional fees that may be associated with the borrowing arrangement. Understanding this concept is crucial in financial transactions, as it sets the foundation for how much needs to be repaid over time, typically with interest.

In finance, the principal amount serves as the starting point for calculating interest. For example, if you borrow $10,000 at a certain interest rate, that $10,000 is the principal. Knowing the principal amount helps you understand your debt obligations.

Other terms like investment, liability, and debt have different meanings in financial contexts. An investment usually refers to assets acquired for generating income or appreciation. A liability represents the overall obligation or debts of a person or business, encompassing all money owed, which includes the principal and any accrued interest or other costs associated with borrowing. Debt is a broader term that encompasses any types of money borrowed to be paid back, but it does not specifically isolate the amount borrowed from interest.