ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Examples of closed-end loans include a home mortgage loan, a car loan, or a loan for appliances.

Detailed explanation-2: -Closed-end credit is a loan or type of credit where the funds are dispersed in full when the loan closes and must be paid back, including interest and finance charges, by a specific date. Many financial institutions also refer to closed-end credit as “installment loans” or “secured loans."

Detailed explanation-3: -Home mortgages and auto loans are types of closed-end credit, with the home and vehicle serving as the collateral. Personal loans are another popular form of closed-end credit. Most personal loans are unsecured, but some personal loans may require collateral, such as cash in a savings account.

Detailed explanation-4: -Common installment loans include mortgages, auto loans, student loans, and personal loans. With each of these, you know how much your monthly payment is and how long you will make payments. An additional credit application is required to borrow more money.

Detailed explanation-5: -An installment loan is actually a common credit product. In fact, you might already have one or two of your own. Installment loans-also known as installment credit-are closed-ended credit accounts that you pay back over a set period of time. They may or may not include interest.