What is an Installment?

Installment is a loan which is paid back over a predetermined period of time. For example if we’re talking about a long-term contract where the there’s a fixed amount of money paid back after each period of time that’s called an installment. Now if the money which is paid is made out of the money owned plus the interest this means that if the payment is fixed then the interest is gradually will be decreasing.

Another example for installment is a car loan or a student loan. And when we’re talking about credit cards then the word installment can’t be used because this loan is revolving so essentially the money what you have to pay to the creditor will be changing as you spend more or less.