A retail purchase installment agreement is a contract between the dealer and the buyer that allows the buyer to pay for items or services in installments. When one settles for this financing or payment option, they will commit to paying the seller the value of the assets as well as the interest. This is one of the best payment options for purchasing high-value assets such as machinery, cars, furniture, and other essential appliances for your home or office. Paying in installments helps prevent disruptions to your cash flow.
Just like any other financial contract, there is a need to invest some energy and time in studying the installment agreement before signing it. This guarantees that one will get the best deal and value for their money. You can avoid costly financial mistakes by ensuring you understand how retail purchase installment contracts work.
Requirements for retail purchase installment agreement
When a purchase installment contract is being drafted, it usually consists of the following:
- A notice in bold for the buyer that they ought to read the agreement before signing. After one signs the agreement, they are also entitled to a copy of the contract.
- The name and address of the buyer are also part of the agreement.
- The name and address of the seller.
- A proper description of the assets or services to be rendered.
- The cash price of the items that one is out to purchase.
- The total cost of the items when paid in installments. This price is expected to be higher than the cash price, considering that interest is charged on the installments.
- The down payment, made by the buyer, is usually a fraction of the total cost.
- The maximum number of installments to clear the balance, the amount of each installment, and the due dates for the payments.
Before you sign a purchase installment agreement, it is essential to understand annual percentage rates. This is the interest charged on your installments. A lower APR will mean lower total finance charges, lower payments, and even lower total purchase prices.