Installment Loan

An installment loan is a type of amortizing loan. Unlike an annuity loan, the total principal and interest charges which make up an installment loan are not amortized using identical installment payments. Instead, the principal is repaid in a series of identical payments while the interest charges decrease steadily throughout the loan term. As the outstanding debt decreases, interest charges also decrease, so the repayment installments become lower as the loan term progresses.

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