What does the term "closed-end credit" refer to?

The term "closed-end credit" specifically refers to credit arrangements that are structured to be paid back in fixed installments over a set period of time until the total debt is paid off. This means that once a borrower takes out a closed-end loan—such as a car loan or mortgage—they receive a specific amount of credit and are required to make regular payments of principal and interest according to a predetermined schedule. Once the loan is fully repaid, the credit account is effectively closed, and the borrower cannot draw on that loan again without reapplying for a new one.

In contrast, the other options describe different types of credit arrangements. For example, the idea of credit that can be borrowed again as payments are made corresponds more specifically with open-end credit, such as credit cards, where the borrower can continue to make purchases up to a limit as they pay off existing balances. The absence of a specific repayment schedule relates to revolving credit accounts, and an unlimited borrowing capacity is characteristic of lines of credit rather than structured loans. Thus, the correct answer is centered on the structured nature of closed-end credit that necessitates regular payments until the total debt is satisfied.