Question

What is a closed line of credit?
a.
A line of credit with a set maximum credit limit.
b.
A line of credit with no interest rate.
c.
A line of credit with a fixed total amount.
d.
A line of credit with a legally mandated repayment schedule.

Answer 1

c.

A closed (closed-end) line of credit is a loan for a fixed total amount that is advanced once and repaid on a set schedule (e.g., mortgages, auto loans). This contrasts with an open or revolving line (like a credit card) where you can borrow, repay, and borrow again up to a credit limit.