Unit+2.1+Installment+Trading+-+Definition

=What is Instalment Trading?=

It is a form of credit sales where the seller allows the buyer to sign an agreement to use the goods immediately but not necessarily to own them. The buyer can pay the seller directly or through a financier which normally is a bank or a finance company. The financier will pay the seller the full price of the goods and collect the full amount from the buyer together with added interest over a number of agreed instalments.

The two main types of instalment trading are:

1. Hire Purchase 2. Deferred Payment