What Doesn’t Represent an Installment Loan Among the Following?

What Doesn’t Represent an Installment Loan?

A) Home mortgage 

B) Auto loan 

C) Student loan 

D) Credit card

The correct answer is: D) Credit card

This is because all the other options (A) Home mortgage, (B) Auto loan, and (C) Student loan represent types of installment loans. An installment loan is a loan that is repaid over time with a set number of scheduled payments. Borrowers agree to make regular payments, usually monthly, until the loan is fully paid off. Home mortgages, auto loans, and student loans all fall under this category as they involve borrowing a specific amount of money and repaying it in installments over a predetermined period. On the other hand, a credit card is a form of revolving credit, not an installment loan. With a credit card, the borrower has a credit limit and can make charges up to that limit, but the payments can vary each month and are not fixed installments.

So, option (D) Credit card does not represent an installment loan based on the explanation provided.

What is an installment loan?

An installment loan is a closed-ended debt product where the borrower receives the entire loan amount upfront and repays it through fixed monthly installments over a predetermined period, differing from revolving credit products like credit cards with flexible repayment terms and variable interest rates.