A type of credit where a person receives a lump sum of money from a financial institution all at once, then has to pay back it back—plus interest—through regular, equal payments.

• A. Credit
• B. Revolving credit
• C. Installment credit
• D. Secure credit

Answer: (C)

When you borrow money and receive a lump sum upfront but repay it in fixed, equal payments over a set period, with interest included in those payments, you’re dealing with installment credit. The payments are usually made monthly and are designed to pay off the entire balance by the end of the term, with each payment covering both principal and interest. This structure is common for autos, personal loans, and mortgages. It’s different from revolving credit, where you have a credit limit you can borrow against, repay, and borrow again (like many credit cards), often with variable balances and no fixed end date. The term secure credit is about whether collateral backs the loan, which can apply to installment loans or other types, but the key feature in this case is the fixed, amortizing payment schedule.