A installment loan, also known as an annuity loan, is a type of loan where you repay a fixed amount each month. This amount consists of two parts: one portion goes toward repaying the loan (the principal), and the other covers the interest on the remaining loan balance.

At the beginning of the loan term, you pay more in interest and less toward the principal. Over time, as the remaining loan balance decreases, the interest portion becomes smaller, and you pay more toward the principal. However, the monthly payment remains the same, making it easier for you to plan your finances. By the end of the loan term, the entire loan is fully repaid.

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