Principal >> Back to glossary
When you are out to borrow a sum of money for any reason, there is a certain amount that you are looking for. This is called the principal. Once you have negotiated a loan you will likely be signing a contract. On that contract it will always show you exactly how much money you borrowed from the lender and it will be labelled as the principal. Now in some cases you may not have physically received that principal amount. A portion of the money may be deemed for administrative fees and other costs. The thing is though, whatever the principal is listed at is what you are committed to paying as well as the interest being charged for the privilege of borrowing the money. In many cases for people that run into financial debt problems it's not the principal amount that is so over whelming, or leads to financial difficulty. It's the size of the payments that have to be made and the amount of interest that is charged. Even if you find a source of funds where you can pay back the principal in a lump sum, many times the contracts will stipulate that you have to pay a large penalty for this. Financial institutions that lend money make their money off the interest they charge. They don't really appreciate loans being paid out before the term expires because they are losing the extra interest that way. To compensate they have these pay out penalty fines attached to them.
There are several reasons why individuals run into financial debt problems. It can be a change in circumstances where they can no longer make the payments. Principal amounts owed are low but the contracts they signed have a lot of stipulations to them that cannot be met when the financial situation changes. When the debt problem begins, panic sets in and people begin to fall into false debt resolution traps that compound their problems.
All of this can be brought to an end as soon as your next step becomes the filling out of our no obligation quote form. Finances are a very complicated manner. Debt problems can only be effectively handled by professionals who understand the financial lending industry. We will be able to connect you to a team of debt negotiation professionals who will not steer you towards borrowing more money to buy you way out of your debt situation because that doesn't work. These experts will design a debt resolution program that will show you how and when you are going to be a debt free individual.
