Final answer:
A monthly payment on a car loan is an example of installment credit, where the total borrowed amount is repaid over time in fixed payments.
Step-by-step explanation:
The correct answer to what type of credit a monthly payment on a car loan represents is b) installment credit.
When you take out an auto loan, the borrowed amount is repaid over a period of time through a series of fixed scheduled payments. This is the essence of installment credit. Each payment typically includes interest and part of the principal amount. An auto loan is different from single-payment credit, where the entire loan is repaid in one lump sum at the end of the term, and also different from revolving credit, which is associated with credit cards, where the credit amount can vary, and payments can as well, as long as a minimum payment is made each month.
Automobile ownership and obtaining credit are significant steps in managing personal finances, impacting your credit history and future financial opportunities.