Which of the following is a characteristic of an installment loan?

There is an introductory period where no interest is accrued.
The item purchased is used as collateral until the balance is paid in full.
A down payment is always required.
It is commonly referred to as a “buy now, pay later” plan.

Question

Which of the following is a characteristic of an installment loan?

    There is an introductory period where no interest is accrued.
    The item purchased is used as collateral until the balance is paid in full.
    A down payment is always required.
    It is commonly referred to as a “buy now, pay later” plan.

anonymous · Answer

I think A would be the correct answer is (A) is an example of a credit card that is a facility banks offers for a specific time period you have an introductory rate of 0% or 2.9% or so...that remains fixed but you can make more than the minimum payment as well if you want. or you get a loan from a bank and for that loan you have montly payments required from which a part of that goes towards the principal amount and a part of that goes towards the interest and finance charges.

(B) is incorrect as one is using the item purchased as collateral hence this is an example of collateral finance.

(C) is when you buy expensive items such as cars or houses hence you have to make a certain percentage down payment.

(D) would be incorrect as this is the case of credit (credit cards) 45 days until you get interest charged on it...

anonymous · Answer

Just took this test it is B. The Item Purchased Is Used As Collateral Until The Balance Is Paid In Full.