installment credit

installment credit

also called  Installment Plan, or Hire-purchase Plan,  

      in business, credit that is granted on condition of its repayment at regular intervals, or installments, over a specified period of time until paid in full. Installment credit is the means by which most durable goods such as automobiles and large home appliances are bought by individuals. Installment credit involves the extension of credit from a seller (and lender) to a purchaser; the purchaser gets physical possession and use of the goods he has bought, but the seller retains legal title to them until every installment has been paid. The purchaser usually is advanced the goods after making an initial fractional payment called a down payment. If the purchaser defaults on his payments at some point, all previous payments are forfeited to the seller, who may also take possession of the goods.

      The appeal of installment buying is that it allows prospective purchasers to enjoy the advantages of owning a relatively expensive good while paying for it gradually out of their future income, instead of having to save the necessary purchase price out of their income first. Installment credit can thus greatly expand the purchasing power of ordinary consumers. Installment credit for the purchase of durable consumer goods first appeared in the furniture industry of the United States in the 19th century. But such credit arrangements only acquired great economic importance around the time of World War I, when they were adopted in the United States on a wide scale in the purchase of automobiles. Installment credit now accounts for the majority of purchases of automobiles, expensive home appliances, and furniture, among other consumer goods.

      Specialized companies called finance companies (finance company) service both the retailers and consumers who use installment arrangements. See finance company.

* * *


Universalium. 2010.

Игры ⚽ Поможем написать реферат

Look at other dictionaries:

  • Installment credit — is a type of credit that has a fixed number of payments, in contrast to revolving credit. Examples* Land loan * Home construction loan * Home mortgage * Some equity loans * Home improvement loan * Automobile loan * Boat loans or RV loans… …   Wikipedia

  • installment credit — A *lease agreement in which a *lessee takes ownership of a leased *asset after a specified number of payments. Installment credit is a common means of financing the sale of *consumer goods …   Auditor's dictionary

  • installment credit — noun a loan repaid with interest in equal periodic payments • Syn: ↑installment loan • Hypernyms: ↑consumer credit, ↑loan …   Useful english dictionary

  • installment credit — Commercial arrangement in which buyer undertakes to pay in more than one payment and seller agrees to sell on such basis and in which a finance charge may be exacted. Such agreements are commonly subject to statutory disclosure regulation; e.g.… …   Black's law dictionary

  • installment credit — Commercial arrangement in which buyer undertakes to pay in more than one payment and seller agrees to sell on such basis and in which a finance charge may be exacted. Such agreements are commonly subject to statutory disclosure regulation; e.g.… …   Black's law dictionary

  • installment plan — Synonyms and related words: acquitment, acquittal, acquittance, amortization, amortizement, bank credit, binder, book credit, borrowing, borrowing power, cash, cash credit, cash payment, clearance, commercial credit, consumer credit, credit,… …   Moby Thesaurus

  • Credit (finance) — Domestic credit to private sector in 2005 …   Wikipedia

  • installment sale — Commercial arrangement by which buyer makes initial down payment and signs a contract for payment of the balance in installments over a period of time. In accounting for such sales, the seller may either account for the profits on basis of each… …   Black's law dictionary

  • installment sale — Commercial arrangement by which buyer makes initial down payment and signs a contract for payment of the balance in installments over a period of time. In accounting for such sales, the seller may either account for the profits on basis of each… …   Black's law dictionary

  • credit rating — Synonyms and related words: bank credit, book credit, borrowing power, cash credit, commercial credit, consumer credit, credit, credit insurance, credit union, financial condition, hire purchase plan, installment credit, installment plan,… …   Moby Thesaurus

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”