What is Closed-End Credit?
Closed-end credit is a form of credit that requires payment in full to be rendered at a specific point in time in the future. In most cases, the extension of closed-end credit involves the accrual of finance charges and interest that are also considered due at the same time that the full principal is settled. Because closed-end credit has a definite end date for the conclusion of the extension of the amount of credit issued, it is a different approach to the revolving line of credit that is the common method with credit cards. Two of the most common examples of closed-end credit are loans for homes and automobiles. Mortgages are essentially a strategy for providing an extension of credit to purchase the home. The structure of the credit will involve the application of a rate of interest. Interest rates for mortgages may be fixed or varied. Once the final total for the credit is determined and approved, the projected total amount of the mortgage is broken down into monthly installment p
