What type of credit arrangement is typically used for major purchases with fixed monthly payments?

The type of credit arrangement used for major purchases with fixed monthly payments is installment credit. This form of credit allows consumers to borrow a specific amount of money and repay it over a set period through regular, equal payments. These payments include both the principal amount borrowed and interest, leading to a predictable repayment schedule. Installment credit is commonly applicable for significant expenses like purchasing a home, a car, or other large items, where the borrower benefits from the certainty of knowing exactly how much they owe each month until the debt is cleared.

This contrasts with other credit types where the terms may not involve fixed monthly payments or set amounts. For instance, revolving credit offers flexibility and allows borrowers to carry a balance and make variable payments, while open-end credit refers to a broader category that can include multiple transactions without a set end date. Variable-rate credit, on the other hand, indicates that interest rates may fluctuate, affecting how much is due each month. In summary, for major purchases demanding fixed, predictable payments, installment credit is distinctly suited.