Which of the following is an example of open-ended credit?

• A. Auto loan
• B. HELOC
• C. Personal loan
• D. Mortgage

Answer: (B)

Open-ended credit means a revolving line of credit you can borrow from, repay, and borrow again up to a set limit. The Home Equity Line of Credit (HELOC) fits this perfectly: it’s secured by your home's equity and gives ongoing access to funds as needed, with a balance that can go up or down and payments that can vary. You typically pay interest only on the amount you’ve borrowed, and you can reuse available credit after repaying.

In contrast, the other options are closed-ended credit: you receive the full loan amount at closing, then repay it in fixed installments over a set term. Auto loans, personal loans, and mortgages are designed for a single disbursement with a structured repayment plan, not ongoing borrowing under the same loan.