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The principal balance, in regard to a mortgage, loan, or other debt financial contractual agreements, is the amount due and owed to satisfy the payoff of an underlying obligation. It is distinct from, and does not include, interest or other charges.
A number of orthodox scholars point to Quranic verses (2:275–2:280) as declaring riba "categorically prohibited" and "unjust" (zulm), and defining it to mean any payment "over and above the principal" of a loan. [136] [137] (Although at least one source states "it is commonly argued" that riba is "defined by hadith".) [138]
There are also savings account products called qardh-ul hasan, (the "loan" being a deposit to a bank account) where the debtor (the bank) may pay an extra amount beyond the principal amount of the loan (known as a hibah, literally gift) as a token of appreciation to the creditor (depositor). These also do not (in theory) violate orthodox sharia ...
Mortgages are also secured loans, meaning that they are backed by collateral — in this case, your home. ... and take out a loan in the amount of $350,000 then your loan principal is $350,000.
Examples of secured loans include mortgages and auto loans. Secured installment loans may take more time to get. For instance, the approval process for mortgages averages 40 days and involves ...
Principal: This is the total amount you borrow when you first take out a loan. It’s also the amount you pay each month to reduce your loan balance with an amortizing loan.
[45] [46] Another similar definition (described by Taqi Usmani) is that riba al-jahiliya was a kind of loan where the borrower was not charged any additional amount above the principal, unless they could not repay when the loan was due, in which case they were charged an additional amount, but not necessarily double or triple the principal.
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