The face value (par value) of an investment/ security/ instrument, etc. It is the original/ initial stated amount that is put or invested by the provider of funds on the expectation that the same amount will be redeemed or paid back on a specific date in the future. For a loan, it is the amount lent by one party (the lender) to another (the borrower) and which will be paid back on its maturity date.

Principal may also refer to the remaining balance on a loan (e.g., a mortgage) at a specific point in time.

The amount of a principal is usually used as the basis on which interest is calculated and paid to the lender. In other words, principal is an amount that excludes any interest, as it represents the initial amount of money that is made under the disposal of a borrower for a specific period of time.

In a different context (in relation to derivatives), principal refers to a principal amount or notional principal amount (NPA).

In broader finance, principal may also imply many things including a chief participant in a deal, an owner of a firm, a key player in a transaction, an investor vs. an investee (in a principal- agent relationship). In general, a principal is an owner, provider of funds, etc.