Revolving credit and installment credit are two types of credit that work differently.
Revolving credit allows borrowers to spend the borrowed money up to a predetermined credit limit, repay it, and spend it again.
With installment credit, the borrower receives a lump sum of money that they must repay in installments by a specified date.
Credit cards and lines of credit (LOC) are two common forms of revolving credit.
You can dip into your account to borrow more money as often as you want, as long as you do not exceed your predetermined credit limit.
As you pay money back, you replenish your available credit.
Unlike revolving credit, an installment loan has a predetermined length, often referred to as the loan term.
The loan agreement usually includes an amortization schedule, in which the principal is gradually reduced through installment payments over the course of several years.
You will receive the money you borrow all at once in a single lump sum.
Common installment loans include mortgages, auto loans, student loans, and personal loans.
I hope this information helps!
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