Which of the following is an example of installment credit?

• A. Mortgage
• B. Credit card
• C. Line of credit
• D. Unpaid balance

Answer: (A)

Installment credit means you borrow a lump sum and repay it in fixed, scheduled payments over a set period, with interest included in each payment. A mortgage fits this pattern perfectly because you take out a loan for the home and repay it in regular, often level, monthly payments over many years until the loan is fully paid.

By contrast, a credit card provides revolving access to a credit limit you can borrow against, repay, and borrow again without a fixed end date. A line of credit is also revolving, offering ongoing borrowing with flexible repayment. An unpaid balance is simply the amount owed at a moment in time and isn’t itself a specific loan type with a fixed term and scheduled payments.

So a mortgage is the example of installment credit.