An installment is a set payment amount borrowers pay periodically, often monthly, to repay a loan or credit. Each installment includes part of the principal amount (the original sum borrowed) and interest (the cost of borrowing). Commonly seen in mortgages, car loans, and personal loans, installments help spread out payments, making large purchases more manageable. Installment plans are beneficial because they allow people to budget over time and afford things they might not be able to pay for all at once.