Question

Which type of credit requires that the borrower pay a specific amount in a set number of payments of equal amounts?

A. Revolving credit

B. Installment credit

C. Noninstallment credit

D. Line of credit

Answer 1

B. Installment credit

Step-by-step explanation:

Installment credit refers to the type of loan where the borrower opts to repay in regular and fixed amounts. Installments are the small periodic payments that the borrower makes to the lender. Typically, installments are made monthly.

In installment credit, the repayment period may range from a few months to years. The installment amount has an interest and principal components.