What type of loan is typically repaid in installments over time?

An amortized loan is a type of loan where the borrower makes regular payments over a specified period until the loan is fully repaid. Each payment typically includes both principal and interest, allowing the borrower to gradually reduce their outstanding balance. This structure makes it easier for borrowers to budget their finances, as the payments are usually consistent throughout the life of the loan.

In contrast, revolving credit allows borrowers to use funds up to a certain limit and make variable payments based on the balance owed, which can change each month. A secured loan is backed by collateral, but it can also exist in different repayment structures, not necessarily involving installments. A balloon loan features lower payments for a period followed by a large final payment, which does not fit the typical installment repayment structure associated with amortized loans.