Principal:
Principal is the part of the amount which is borrowed. In other words, the face amount of debt which is borrowed or lent. The one has to pay more than the principal interest to the lender with the interest.
Interest:
Interest is the extra amount paid by the borrower to its money lender for the compensation of use of assets. Interest is calculated on the principal amount which could be of any percentage decided on the agreement of the borrower and money lender.
Differences:
| Basis | Principal | Interest |
|---|---|---|
| Definition (www.oxforddictionaries.com) |
Denoting an original sum invested or lent | Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt |
| Synonyms | Paramount, prominent, predominant, primary and prime | Importance, enthusiasm, significance, passion and sympathy |
| Antonyms | Insignificant, subordinate, unimportant, lesser and minor | Insignificance, indifference, hate |
| Part of Speech | Adjective | Noun |
| Types | The types of interest are:
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| History | According to historian Paul Johnson, the lending of “food money” was commonplace in Middle East civilizations as far back as 5000 BC. They regarded interest as legitimate since acquired seeds and animals could “reproduce themselves”; whilst the ancient Jewish religious prohibitions against usury were a “different view”. | |
| Word origin | The word principal was originated from Middle English: via Old French from Latin principalis. | The word interest was originated from Late Middle English: from Anglo-Norman French interesse. |
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