One type of closed-end credit is an installment cash credit. This type of credit involves borrowing a specific amount of money and repaying it in fixed monthly installments over a set period of time.
Here's how it works:
1. When you take out an installment cash credit, you receive a lump sum of money upfront.
2. You then repay the borrowed amount, along with any interest, in regular installments over the agreed-upon term, which could range from months to years.
3. The payments are typically fixed, making it easier to budget and plan for repayment.
Unlike a credit card where you have a revolving line of credit with the option to carry a balance from month to month, an installment cash credit is a one-time loan with a predetermined repayment schedule.
