Which of the following is NOT an element of installment credit?

• A. A single lump-sum payment at the end of the term
• B. Regular periodic payments
• C. A fixed repayment schedule
• D. Interest charged on outstanding balance

Answer: (A)

Verified step by step guidance

1. Understand the concept of installment credit: Installment credit is a type of loan where the borrower agrees to repay the loan in regular periodic payments over a fixed term, including interest on the outstanding balance.
2. Analyze the options provided: Each option represents a characteristic of installment credit. You need to identify which one does NOT align with the definition of installment credit.
3. Option 1: 'A single lump-sum payment at the end of the term' - This does not align with installment credit because installment credit involves regular periodic payments, not a single lump-sum payment.
4. Option 2: 'Regular periodic payments' - This is a key feature of installment credit, where payments are made at regular intervals.
5. Option 3: 'A fixed repayment schedule' and Option 4: 'Interest charged on outstanding balance' - Both are characteristics of installment credit, as the repayment schedule is fixed and interest is charged on the remaining balance.