An installment loan is an approach to borrow funds, typically for just one big purchase such as an automobile, household or university training. The borrower receives a lump sum and repays the loan over a set term in monthly payments, or installments after getting approved by a lender.
Installment loans work differently than revolving credit, such as for example charge cards, which offer a line of credit to constantly borrow from as opposed to a solitary add up to repay. Revolving credit enables the cash to again be borrowed once it is paid down, whereas an installment loan account is closed once it’s repaid.