What is a common characteristic of installment loans?

A defining feature of installment loans is that they are repaid in regular installments over a specified period. This structure allows borrowers to plan their finances more effectively since they know exactly how much they need to pay and when. Installment loans typically have a fixed interest rate, and the payments include both principal and interest, which helps in systematically reducing the loan balance over time.

The other options do not accurately capture the nature of installment loans. For instance, varying monthly payments are more characteristic of certain types of loans like variable interest loans or mortgages that may have fluctuating payments depending on interest rates. Interest-free loans exist, but they are not a common characteristic of most installment loans, which generally include interest. Additionally, while some installment loans can be unsecured, such as personal loans, many are secured, like auto loans, supported by the collateral of the vehicle itself. Thus, the repayment structure is what fundamentally characterizes installment loans.