ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -While personal loans are the most common installment loans, auto loans, student loans, buy now, pay later loans and mortgages are also popular-and sometimes necessary-financing options.

Detailed explanation-2: -Installment loans-loans that allow you to borrow money and pay it back in equal monthly payments with a fixed interest rate-are a handy personal finance tool if you’re looking to pay off sizable debts in small, manageable chunks.

Detailed explanation-3: -There are two types of installment loans; unsecured or secured. An unsecured loan does not need any form of collateral, only a promise to pay back the debt. Think of medical debt, personal loans, or credit cards. A secured installment loan is backed by an asset equal to the amount being borrowed.

Detailed explanation-4: -Two common types of loans are mortgages and personal loans. The key differences between mortgages and personal loans are that mortgages are secured by the property they’re used to purchase, while personal loans are usually unsecured and can be used for anything.

Detailed explanation-5: -Examples of installment loans include auto loans, mortgage loans, personal loans, and student loans. The advantages of installment loans include flexible terms and lower interest rates.