Real Estate Glossary

What's a Fixed Installment ?

A fixed installment is a type of loan repayment plan in which the borrower agrees to make a set, unchanging payment each month for the duration of the loan. This payment usually includes both the interest and the principal of the loan. The amount of the installment is determined at the time the loan is originated and remains the same throughout the life of the loan.

This type of loan repayment plan is commonly used in mortgages, car loans and personal loans. For example, in a fixed rate mortgage, the borrower agrees to pay a specific amount each month for 30 years, with a fixed interest rate that will not change over the life of the loan.

In contrast, some loans have variable installment, which means that the amount of the installment can change over time based on external factors like interest rate fluctuations.

The benefit of a fixed installment is that the borrower knows exactly what their monthly payment will be and can budget accordingly. It's also easier to predict the total cost of the loan and plan for it over the life of the loan. However, it may also mean that the borrower will end up paying more interest over the life of the loan than if the interest rate were variable.

Overall, fixed installment loans are a good option for people who want a predictable monthly payment and prefer the stability of a fixed interest rate.