What type of credit involves equal periodic payments until the loan is paid off?

The correct answer is installment credit, which is characterized by repaying a loan through equal periodic payments over a specified period until the loan is fully paid off. This type of credit is commonly associated with loans such as auto loans, mortgages, and personal loans. Each installment payment typically includes both principal and interest, which ensures that the borrower gradually reduces the outstanding balance while fulfilling their payment obligations.

In contrast, revolving credit allows borrowers to charge up to a certain limit and carry a balance from month to month, with varying payment amounts based on the outstanding balance. This means that payments can fluctuate and do not consist of equal periodic payments.

A credit limit refers to the maximum amount that a borrower can access under a revolving credit arrangement, rather than a repayment structure. Open credit is a term that can describe various credit agreements allowing for continuous borrowing and repayment, but it does not inherently define equal payment schedules. Thus, installment credit stands out for its structured repayment approach based on fixed installments.