Legal Definitions - closed-end loan

A closed-end loan is a type of loan that has a specific date by which the borrower must repay the entire loan amount along with interest. These loans are usually given all at once to help the borrower purchase or achieve a specific thing. If the borrower fails to repay the loan, the lender may gain the right to possess the item that was purchased with the loan.

Unlike open-ended loans, which allow borrowers to borrow multiple times without a specific repayment date, closed-end loans have a fixed repayment date. Examples of closed-end loans include:

• Home mortgage loans
• Car loans
• Appliance loans

For example, if someone wants to buy a car but doesn't have enough money to pay for it upfront, they might take out a closed-end car loan. The lender would give them the entire loan amount at once, and the borrower would have a specific date by which they must repay the loan and interest. If they fail to do so, the lender may repossess the car.