INSTALLMENT CREDIT Meaning and
Definition
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Installment credit refers to a type of loan or credit arrangement in which a borrower receives a fixed sum of money upfront and agrees to repay the loan amount along with interest in regular and equal installments over a specified period of time. This form of credit is typically used for large purchases such as a car, home, or education, where the borrower cannot afford to pay the entire amount upfront.
Under an installment credit agreement, the borrower and lender establish a repayment schedule that outlines the amount to be paid each month, the interest rate applied, and the duration of the loan. The borrower is obligated to make the agreed-upon payments at regular intervals, often monthly, until the loan is fully paid off.
Typically, installment credit includes both principal and interest payments, with the interest portion being higher initially and gradually decreasing over time. This ensures that the lender earns a profit for providing the loan while allowing the borrower to manage their payments effectively.
One key advantage of installment credit is that it provides individuals with a structured and predictable repayment plan, allowing better financial planning and budgeting. Installment credit is also a commonly used method to build credit history and demonstrate creditworthiness, as on-time payments are reported to credit bureaus.
Overall, installment credit facilitates significant purchases by allowing borrowers to spread the cost over time, instead of needing to pay the full amount upfront.
Common Misspellings for INSTALLMENT CREDIT
- unstallment credit
- jnstallment credit
- knstallment credit
- onstallment credit
- 9nstallment credit
- 8nstallment credit
- ibstallment credit
- imstallment credit
- ijstallment credit
- ihstallment credit
- inatallment credit
- inztallment credit
- inxtallment credit
- indtallment credit
- inetallment credit
- inwtallment credit
- insrallment credit
- insfallment credit
- insgallment credit
Etymology of INSTALLMENT CREDIT
The word "installment" originates from the Latin word "installare", which means "to put in place" or "to establish". It entered the English language in the early 19th century.
The word "credit" is derived from the Latin word "creditum", which means "loan" or "thing entrusted to another". It came into the English language in the late 16th century.
When these two words are combined, "installment credit" refers to a system of purchasing goods or services in which the buyer pays for them over a specified period through regular payments or installments. The term likely emerged in the financial industry during the early 20th century with the increasing popularity of credit purchases.
Similar spelling words for INSTALLMENT CREDIT
