Question

What is true about the payments with closed-end credit?

a.They increase over time.
b.The decrease over time.
c.They remain the same until the credit is paid off.
d.They vary from month to month.

Answer 1

C)They remain the same until the credit is paid off.

Step-by-step explanation:

In a closed-end credit, borrower and lender agree on principal amount, interest rate and monthly payments. These features stay the same over time.

The most common types of closed-end credit are mortgages and car loans.

For example, if a person wants to buy a car on credit, they agree to pay a monthly amount, that includes both interest and principal payments, until the full amount is paid off in a specified date in the future. After the last payment, the right to ownership of the car is transferred from the borrower to the lender, closing the credit.