Question

A furnace company offers borrowers a payment plan that allows them to make regular monthly payments until they have paid the total price of the furnace.

What type of credit is this?

Answer 1

That would be known as Installment Credit

I just took a quiz with this being the correct answer. Hope that helps :)

Answer 2

Paying off one's balance with a regular monthly payment plan could be called extended credit equal payment plan ie credit spread over a certain time interval including prinicipal and interest and the interest could be quite low as car dealers make it to attract buyers for their new cars. Extending the payments this way allows the buyer to handle the smaller payments than one big lump sum. This is okay for employees who have a monthly salary but for contract workers whose pay is not regular a lump sum payment is usually necessary when times are good economically.