Closed-End Credit
Categories: Trusts and Estates, Bonds, Index Funds, Managed Funds, Insurance, Regulations
A type of loan or financing that you take out for a specific purpose and agree to repay by a specific date. Home loans and car loans are examples of closed-end credit. This type of credit is the opposite of more open ended types of financing, such as lines of credit.
Example
You take out a home loan for $100,000 at 5%. You can only use your mortgage to pay off your house and you agree with the bank to pay off your mortgage in 20 years. Congratulations—you're the proud owner of a home and closed-end credit.