In this article we look into what an installment loan is, and what distinctions this type of loan has. You will learn how it differs from a line of credit, what are the advantages and disadvantages of an installment loan are, and what to look out for if you are looking to apply for an installment loan. An installment loan is a type of loan where you receive an agreed-upon lump sum of money all at once, and then have to pay it back in pre-scheduled installments. Typically, these installments will have to be paid monthly, and you’ll start paying them right away.