'principal-and-interest' is a modern compound formed in English by combining the nouns 'principal' and 'interest', where 'principal' denotes the original sum lent and 'interest' denotes the fee charged for borrowing.

'principal' originates from Latin via Old French 'principal' (from Latin 'principalis' and 'principium'), and 'interest' comes from Latin 'interesse' through Old French 'interest'; the financial compound 'principal and interest' developed in English as loan- and accounting-related terminology in the 18th–19th centuries and later became commonly hyphenated in compound adjectival or noun uses.

Initially, 'principal' and 'interest' were separate financial terms referring respectively to the loaned sum and the charge for borrowing; over time the fixed phrase 'principal and interest' came to be used to denote the single combined payment (or the combined components) for loan repayments.