installment

An installment is a scheduled payment that partially satisfies a debt or obligation. Installments are paid at regular intervals until the total amount due is paid. The term is used across finance, consumer purchases, rent, and subscriptions. The spelling instalment is common in British English; installment is the preferred form in American English.

In finance, an installment loan is a loan repaid with a series of equal or variable payments over a set term. Each payment covers interest and reduces principal; over the term, the loan is amortized. Fixed-rate loans have constant installment amounts; variable-rate loans may change with market rates.

Typical examples include auto loans, mortgages, personal loans, and credit-enabled purchases on installment plans. The amount of each installment in a fixed-rate loan can be calculated by the standard loan payment formula: M = P * [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is the periodic interest rate, and n is the number of payments.

Installment plans can also refer to arrangements for goods or services purchased in parts rather than upfront, sometimes called layaway or credit sales. Where legally regulated, consumer protection rules govern disclosures of total cost, interest, and right to rescind or modify terms.

Usage notes: In British English, instalment is common; in American English, installment. The term is distinct from a single lump-sum payment or from subscription payments that renew automatically.