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What is the difference between an installment loan and an interest-only loan?

April 26, 2017Business difference Finance installment interest-only loan

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What is the difference between an installment loan and an interest-only loan?

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Your question is a bit obscure but do you mean the difference between a loan where you pay principal and interest as opposed to paying the interest only? If so, the major difference is that, after the contract period, that is the loan term of maybe 5 years or whatever has been agreed between you and the lender, if you are paying principal and interest, means that if you have made your payments on time and for the amount required, you will have repaid the loan and be debt free. However if you are paying interest only, you will still owe the original loan amount and still be in debt. Principal and interest repayments are better for you in that you are reducing your debt.