open-ended loan

Open-ended loan commonly refers to a revolving credit arrangement under which a borrower may obtain advances repeatedly, often up to a specific credit limit. In consumer-credit law, the Truth in Lending Act defines an open-end credit plan as having three key elements:

  • The creditor reasonably contemplates repeated transactions;
  • The creditor may impose a finance charge from time to time on the outstanding unpaid balance; and
  • The amount of credit available is generally replenished as previous balances are repaid. See: 15 U.S.C. § 1602(j).

Regulation Z further provides that the amount of credit available under the plan is generally restored as the borrower repays the outstanding balance.

Common examples include credit cards, personal or business lines of credit, and home equity lines of credit (HELOCs). The borrower may obtain additional advances after repayment without negotiating a new loan for each advance, subject to any applicable credit limit and the agreement's conditions. The creditor may charge interest and other finance charges on outstanding balances and may impose annual, transaction, late-payment, or other fees if authorized by the agreement and applicable law.

The term "open-ended" does not mean that the account can never expire or be closed. A plan may have a term, draw period, renewal provision, or conditions allowing the creditor or borrower to suspend or terminate future advances, subject to the contract and applicable law.

For consumer open-end plans, the Truth in Lending Act and Regulation Z generally require creditors to provide account-opening disclosures about applicable rates, fees, and balance-computation methods, and periodic statements showing account activity and charges. Open-end plans secured by a consumer's dwelling, including HELOCs, are subject to additional requirements. The exact rights and obligations depend on whether the plan is consumer or business credit, whether it is secured, and on the account agreement.

This contrasts with closed-end credit, meaning consumer credit that provides a specified amount to be repaid under a defined repayment schedule, like a car loan. 

[Last reviewed in August of 2026 by the Wex Definitions Team]

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