Closed-end

Another name for this credit is installment credit. The reason it is called that is that the loan gotten can only be used for a certain type of purchase. Hence, you are limited as to what you can use the money for.  For this credit category, you have to pay fixed monthly payments within a time. This loan is usually secured. As a result, if you default the installment payments, the creditor can possess the collateral and then liquidate it to get their money back.