What exactly is an installment loan? An installment loan is a economic item that allows people to borrow a big amount of cash they can then repay as time passes. The installment loan often holds a fixed interest and needs regular monthly obligations. Deeper meaning Consumers prefer installment loans for purchasing items which they can not buy in money. Installment loans have actually clear terms presented. If the debtor signs the contract when it comes to loan, the agreement demonstrably specifies the mortgage term, rate of interest and feasible charges for missed or payments that are late. Some do have prepayment penalties although installment loans permit early repayment. Collateral secures some forms of installment loans, such as for instance mortgages and automobile financing.