Põhivõla

Põhivõla is an Estonian term that translates to "principal debt" or "main debt." It refers to the original amount of money borrowed in a loan agreement, separate from any accumulated interest or fees. When a borrower takes out a loan, the põhivõla is the sum they are obligated to repay.

Understanding the põhivõla is crucial for managing debt. It is the core amount on which interest is calculated. As a borrower makes payments, these payments are typically allocated first to cover any accrued interest, and then the remaining portion reduces the põhivõla. This process is known as amortization.

The põhivõla can be repaid in various ways, depending on the loan terms. Common repayment structures include fixed monthly payments that cover both principal and interest, or interest-only payments for a period followed by principal repayment. Some loans may allow for lump-sum payments towards the põhivõla to reduce the total interest paid over the life of the loan and shorten the repayment term.

In financial contexts, the outstanding põhivõla is a key metric for assessing the remaining debt obligation. Lenders monitor this amount to track the borrower's progress and the total exposure of the loan. When a loan is fully repaid, the põhivõla has been reduced to zero.