Installment loan
A loan repaid in fixed monthly payments over a set term. Personal loans, auto loans, and mortgages are all installment loans.
Full definition
An installment loan is a loan repaid in fixed monthly installments over a defined term. Each payment includes interest and principal according to an amortisation schedule. Personal loans, mortgages, auto loans, and student loans are installment loans. They contrast with revolving credit (such as credit cards), where the balance and minimum payment fluctuate.
- Written by
- Get Advance Loan Editorial Team
- Reviewed by
- Compliance Review
- Published
- January 15, 2026
- Last reviewed
- May 22, 2026
- Revolving creditCredit you can repeatedly draw on up to a limit, with a minimum monthly payment based on the current balance. Credit cards and HELOCs are revolving.
- Prepayment penaltyA fee some lenders charge if you pay off the loan before the scheduled end of the term. Most U.S. personal loans do not have one.
- Late feeA fee charged when you don't make a loan payment by its due date. Typically $15 to $40 depending on the lender and state.
- DelinquencyMissing a scheduled payment by 30 days or more. Reported to credit bureaus and a major negative factor in credit scoring.
- DefaultFailure to repay a loan according to its terms. Usually declared after 90 to 120 days of missed payments, depending on lender and product.
- Charge-offAn accounting action a lender takes after concluding a debt is unlikely to be repaid. Doesn't erase the debt; it stays on your credit report.
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