What is payment by installments, the used conditions, pluses and minuses of such payments, differences from the credit

Sometimes there is a need for acquisition of any goods, but the person has no sum of money demanded for this purpose. In this case it is also necessary to get acquainted with what is payment by installments on what conditions it is provided that is necessary for this purpose. This type of the financial relations has the features, merits and demerits.

Payment by installments – what is it?

It is not necessary to confuse this concept with the credit. Payment by installments is a payment by parts by the buyer of total cost of the acquired goods or services during certain time. The procedure of payments, its terms, the sum of regular periodic payments are specified in the contract between the parties of the transaction of purchase and sale. At the state level such financial relations are regulated by the Civil code.

What is the card of payment by installments?

Now it many banks suggest to become. The card holder can buy goods or services for money by installments for that amount which for it is credited by financial institution. From it full payment of necessary cost to the seller is made then her holder pays a debt to bank by installments. Periodic (is more often monthly) the contribution pays off by division of total amount into equal parts. The period during which the debt has to be closed, is defined by financial institution and in advance makes a reservation with the borrower.

Payment by installments conditions

At different financial institutions of a condition can differ, but in most cases they are such:

1. Payment by parts for goods or service – an opportunity which is given more often to persons by age of 21-60 years.
2. To clients 21 years are younger or payment by installments can be more senior than 60 years is provided, but on the terms of restriction of cost of services or goods and terms of its payment. They are established to the discretion of the seller. The last can demand also participation in the transaction of the guarantor from the buyer.
3. One of conditions of granting payment by installments is the first contribution of a certain sum which is 20-30% of the price of goods or service.
4. For receiving the opportunity of payment by parts need to give a package of necessary documents.

Pluses and minuses of payment by installments

Such way of interaction is mutually favorable – the seller realizes the goods or service, and the buyer has an opportunity to make payment in full not at once. Taking into account that payment by installments, more advantages it gives it to the second therefore it does not provide need to overpay for the account of absence or minimization of an interest rate. The seller accepts risk of untimely payment or its total absence.

Pluses of such way of interaction:

1. Execution of the transaction requires the minimum package of documents from the buyer.
2. Payment by installments is made out quickly.
3. Many sellers allow the client most to establish payment terms.
4. The buyer can use the acquired goods or service at once. For example, if the person buys the TV by installments, it can begin to use it in day of execution of the transaction, and to make payments later, on time.

Payment by parts has also minuses:

1. During transaction the introduction of initial contribution is required.
2. More often sellers establish small repayment periods of a debt – 1-12 months. Depending on goods cost they can be increased up to 3 years.
3. Considering what is payment by installments, and the fact that it is paid without percent or with the minimum percent, sellers who provide it can go on cunning – to initially overstate the price of goods or service. The consumer is recommended to study well the price policy of the market in the necessary segment.

What does payment by installments differ from the credit in?

There is a number of nuances which show differences between these types of loans:

1. Conditions of execution of the transaction. If the way of interaction – payment by parts, then is provided payment by installments without bank at which the buyer and the seller act as its participants. At registration of the credit such parties as bank and the borrower appear in the contract.
2. For receiving payment by installments there is no need previously to submit the application, to expect approval, as in a case with the credit.
3. Payment by installments is made out on payment of goods and services, for example, if there is desire to take the fridge by installments. The credit can be issued both with the same purposes, and with the purpose to take from bank money cash.
4. If you pay with installments the first contribution is obligatory, and when crediting in it there is no need more often.
5. At registration of the credit the bank establishes an interest rate which can reach 25-30%. In case of payment by installments it is absent or is minimum.
6. Payment by installments is given for 1-12 months (at most 3 years). The contract of crediting with bank can be made for a period of up to 5 and more years.
7. On the terms of payment by installments the seller can put forward need of acquisition by the client of related products and services as an indispensable condition. When crediting there can be only a requirement to pay an insurance, but in some cases and it can be avoided.

Where it is possible to issue payment by installments?

The algorithm of this procedure is not difficult. For example, the person decided to buy a sofa on the installment plan. There are several options of where it can be done:

1. Shop. Having studied the market and having estimated offers, having analyzed what is favorable payment by installments and where that can be received, the client addresses the chosen seller and buys the necessary goods.
2. Online store. Now many sellers working online are ready to provide payment by installments. Execution of the contract can be made by means of electronic or by mail.
3. Bank. In financial institution it is possible to issue the card of payment by installments, having paid from it goods with the subsequent payment of debt not to the seller, and bank.

What can be bought on the installment plan?

The list of possible acquisitions is extensive. Now even the apartment by installments is available option. The list includes also such popular groups of goods:

1. Pieces of household, electronic appliances (fridge, TV, microwave oven and so on).
2. Furniture (complete kitchens, lunch groups, bedrooms, halls, living rooms furniture, office furniture).
3. Services of cosmetology and medicine.
4. Gadgets and accessories. For example, it can be such goods by installments as the mobile phone, the tablet, the computer, covers on mobile devices, headsets.
6. Construction materials, plumbing.
7. Equipment for business activity.

How to issue payment by installments?

The procedure simple also includes such stages:

1. Choose necessary goods in shop where it is provided to a possibility of payment by parts.
2. Address the staff of shop for registration of payment by installments.
3. Bring initial contribution, sign the contract with the seller.
4. Monthly you make payment in the designated sum in cash desk of shop.

If you use services of bank, calculation is made from the card of payment by installments at once. The client receives goods on hands after payment. In this case it is important to consider how to choose the card of payment by installments. Pay attention to such nuances:

1. Sum limit.
2. Service cost. In many banks it is free.
3. The number of partner shops in which you can buy goods. The their is more, the better.
4. Existence of an opportunity to make purchases not only from partners. It will expand a scope of the card of payment by installments.
5. The penalty sum in case of untimely repayment of a debt. It can be expressed in the fixed sum or as a percentage.

What documents are necessary on payment by installments?

Their list is less in comparison with the package necessary for crediting. For example, if interest-free payment by installments or the transaction with the minimum percent is made out, there is no need for providing the reference confirming solvency of the client from the place of work, form 2-NDFL. Such documents will be necessary for registration:

1. Passport of the state sample.
2. The second document of confirmation of the personality (for example, driver's license).
3. Identification code.

What will be if not to pay payment by installments?

Sellers and financial institutions try to secure themselves against unfair consumers as much as possible. For example, the client has a car by installments or any other goods. All data on terms and the sums of regular payments are specified in the contract. Signing it, the client undertakes to fulfill the designated requirements. If it does not occur, the seller has the right to appeal to arbitration court with the requirement to repay the debt and to pay a penalty. The last can make 0.03% of the amount of debt a day. Additional penalties also can be applied to the unfair client.