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Installment credit is an agreement in which a merchant or lender allows a consumer to take and use merchandise in exchange for a promise to pay for it over time. The consumer may make a down payment, such as with a car purchase, and signs a contract that specifies the interest to be paid, the timeframe within which the item must be paid for, and any penalties the consumer will incur in the event he or she defaults on the terms of the agreement. Payment is made in a specified number of equal payments called installments. Installment loans include car loans, mortgages and student loans.