Question

The principal is $Rs.1000$, so if you pay off $Rs.500$, the remaining $Rs.500$left to repay is called the
(a). Interest
(b). Loan
(c). Principal
(d). Rate

Answer 1

This is a problem of interest. We will see the definitions of each of the given option answers and conclude the best possible answer.

Complete step by step solution:
The principal is $Rs.1000$, payed off amount $Rs.500$and remaining amount left to repay is R $Rs.500$

Principal = $Rs.1000$ (given in the problem statement)
The amount which is paid off by the borrower to the lender is the pay off amount.
Pay off = $Rs.500$ (given in the problem statement)

Now, after deducting the payoff amount from the principal amount, we will get the remaining to repay amount as:
Remaining to repay = Principal – Pay off = $Rs.1000 - Rs.500 = Rs.500$
The remaining $Rs.500$ to repay is called the Loan.

Hence, option (b) is correct.

The other options cannot be the answer because if we see the definitions of the other terms,
Interest: The interest is the amount above repayment of the principal at a particular rate.
Rate: A rate or interest rate refers to the amount charged by a lender to a borrower, it is represented in percentage.
Loan: It is the amount that is left at the borrower to repay.

Note: In this kind of problem it is a good option to know the definitions of the terms like principal, interest, rate and loan, and how they are used.