What is a loan that provides a specific amount of money to be paid back over time called?

An installment loan is a type of loan where a specific amount of money is borrowed and is to be repaid over a defined period through regular payments, which may include both principal and interest. This structure allows borrowers to know exactly how much they need to pay each month until the loan is fully repaid. Examples of installment loans include personal loans, car loans, and mortgages.

The defining characteristic of an installment loan is that it features a fixed repayment schedule, making it easier for borrowers to budget their finances around these predictable payments. This predictability is beneficial because it helps individuals manage their cash flow effectively over the duration of the loan.

In contrast, a revolving loan allows borrowers to access funds up to a credit limit, with the option to withdraw and repay as needed, which differs from the fixed repayment schedule of an installment loan. Secured loans require collateral, which is not a defining characteristic of an installment loan. Unsecured loans do not require collateral but can be in the form of installment loans as well, indicating that they can be structured in different ways. However, only the installment loan specifically refers to a loan repaid over time with set payments.