What Is an Installment Debt?

Pay by installments are mostly used for product transactions with long production cycles and high costs. Such as the export of complete sets of equipment, large vehicles, heavy machinery and equipment. The installment method is that after the import and export contract is signed, the importer first pays a small part of the payment as a deposit to the exporter, and the rest of the payment is after the product has been partially or completely produced and shipped, or the product is installed and tested. , Investment and repayment in installments upon expiration of the quality assurance period.

installment

(Transaction payment method)

Installment methods were developed after the Second World War. Initially, it was limited to the purchase of general daily goods or services. Later, with the rapid development of productive forces, the scale of industrial and agricultural production expanded, the required costs increased, and the development of bank credit, the field of installment payments expanded to the purchase of large machinery and equipment and raw materials.

Along with the improvement of China's financial services and the change in people's consumption habits, instalment purchases, which are popular abroad, have been introduced into China, and have quickly been recognized by domestic consumers. People who use instalments to pay are usually young people who currently have poor ability to pay but have consumer demand. The products they consume are usually laptops, mobile phones, digital products, etc.

Installment methods are usually provided jointly by banks and installment providers. Banks provide consumers with

The installment is actually a loan provided by the seller to the buyer. The seller is

The installment method is that after the import and export contract is signed, the importer first pays a small part of the payment as a deposit to the exporter, and the rest of the payment is after the product has been partially or completely produced and shipped, or the product is installed and tested. , Investment and repayment in installments upon expiration of the quality assurance period.

The buyer and the seller sign a contract at the time of the transaction, and the buyer pays the buyer for the goods and services purchased in installments within a certain period of time. The date and amount of each payment are stated in advance in the contract.

There are various forms of installment terms:

Understand the scope of installment payments. Banks have different approaches to installment payments.

The basic calculation uses series knowledge to have the installment formula: x = a (1 + p) ^ m [(1 + p) ^ (m / n) -1] / [(1 + p) ^ m-1]

Where a

Three installments

First payment in 4 months after purchase, second payment in four months, third payment in four months

Six installments

First payment in 2 months after purchase, second payment in 2 months, sixth payment in 12 months after purchase

Twelve installments

First payment after purchase, second payment one month later, twelfth payment 12 months after purchase