Which of the following best describes installment credit?

Installment credit is characterized by its structure of being used for the purchase of high-cost items, such as major appliances, vehicles, or furniture, where the borrower agrees to repay the amount borrowed in fixed monthly payments over a specified period. This type of credit allows individuals to make significant purchases without needing the entire amount upfront. The requirement of fixed monthly payments provides borrowers with a clear repayment plan, making it easier to budget their finances over time.

This structure distinguishes installment credit from other forms of credit, such as revolving credit (like credit cards), which allow for flexible borrowing and repayment but do not have a fixed repayment schedule. Additionally, installment credit is more suitable for larger purchases rather than small, everyday items, which are typically paid for with cash or through a credit card. Furthermore, the concept of unlimited borrowing without a repayment structure is not applicable to installment credit, as it involves specific terms and limits based on the loan agreement.