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What is the collateral?

the downpayment does not reduce the principal until the termination of the contract, meaning that if you put a 25% downpayment on it, that is not in the hands of the lender until the rest of the principal is paid off, it is a margin that is guaranteed to the lender in case of default, and has to be kept in escrow

also, just wanna say this: i keep seeing the word "principle" being used in relation to the amount owing in a bill

principle is more or less a synonym of axiom or rule or law, principal is the responsible party or the amount owed in a loan, or the chief executive of a school

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Discussion

Laeserin 1y ago

Sorry, principal.

ᴛʜᴇ ᴅᴇᴀᴛʜ ᴏꜰ ᴍʟᴇᴋᴜ 1y ago

i saw this misspelling, or more accurately wrong word usage in a dictionary you quoted yesterday or so, it's embarrassing to anyone who knows the english language well

Laeserin 1y ago

Could just be my German spell-check changing things.

ᴛʜᴇ ᴅᴇᴀᴛʜ ᴏꜰ ᴍʟᴇᴋᴜ 1y ago

pretty sure the word prince and principal are related and that it is most definitely a different word, i think in german it's prinzip, or synonym grundsatz, regel, or element

yes, principal in german is rektor or direktor, haupt- or das Kapital (yes that one), schulleiter

(of money) denoting an original sum invested or lent.

"the principal amount of your investment"

the words are closely related but different, and probably the confusion comes out of their close relation, a principle is essential, an element, a thing with controlling influence, but a principal is the ruler or king or basis or collateral

yes, and collateral literally means "from both sides" which implies that the principal is collateral meaning that it only can be released to the lender upon settlement of the contract, ie, it requires fulfillment of the contract

Laeserin 1y ago

Ah, there's a downpayment as collateral. 🤔

ᴛʜᴇ ᴅᴇᴀᴛʜ ᴏꜰ ᴍʟᴇᴋᴜ 1y ago

yes, that's part of the assurance on both sides

it could equally be a title on property as well, anything that can be called "consideration" in contract law terms