installment loan

Installment credit is a type of loan where the amount borrowed is repaid in regular, fixed payments over a set period. This method is commonly used for purchasing durable goods like automobiles and large home appliances.1

Key features include:
* Repayment Schedule: Payments are made in installments over time until the full amount is paid.1
* Ownership: The seller typically retains legal title to the goods until all installments are paid, even though the buyer has possession and use of the item.1
* Down Payment: Buyers usually make an initial partial payment, known as a down payment.1
* Default: If a buyer defaults on payments, they may forfeit previous payments and the seller can repossess the goods.1

Installment credit allows consumers to enjoy expensive goods while paying for them gradually from future income, thereby expanding purchasing power. This practice became widespread in the United States around World War I, particularly for automobile purchases.1