Question

How much is the _____ on that loan?
principel
principle
principal

Answer 1

Principal is the correct one

Answer 2

How much is the principal on that loan?

EXPLANATION:

Principal and principles are homophones with different meanings.  

The word principal as a noun is used to refer a person with authority or an important role like a school or college principal. This can also be used as an adjective to refer something of first or prime order of importance. Like, the principal cause of the war.  

Financially, the term principal of loan refers to the primary amount of the loan borrowed. Any interest to be paid for the load is based upon this principal amount.  

The word principle is usually a noun and refers to a set of rules referring to moral, legal, ethical, natural, or social standards. Like, the principles of Gandhiji.