2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Everyone wants to live beautifully. A car, an apartment, modern technology, a trendy phone - the desire of most normal people. But not everyone has the money to buy it overnight. Therefore, people resort to services such as installments and loans. The difference between them is not known to everyone.
How is an installment plan different from a loan?
Loans improve the quality of life and make it more pleasant and comfortable. They help out in a variety of situations. Loans can be commercial, consumer and auto loans. Both legal entities and individuals can act as borrowers. A loan can be obtained both from a bank and at a retail outlet for the purchase of goods. It is issued at interest and for various periods.
How is an installment plan different from a loan? The main difference is that there can be no overpayments for a product (service) in installments. And it is impossible to get it at the bank, as it contradicts the main activity of the credit institution.
If in documentsthe bank appears, that is, the sale and purchase agreement is concluded with its participation, this is a loan.
How is an installment plan different from a loan? Most often, installments are provided for the purchase of household appliances and vehicles. In addition, the difference between an installment loan and a loan is the terms of financing. Typically, the service is provided for a short period of time - from 3 to 12 months. Rarely for two years. The payment of a consumer loan can be extended over 3-5 years.
Where can I get an installment plan?
Ads offering to buy goods in installments are quite common on TV screens and banners on the street. What is the difference between an installment plan and a loan?
There are two installment options. The first is when the service is a loan. In this case, an agreement for the purchase of goods is concluded with a retail outlet, and a loan agreement is signed with a bank. In this case, the seller receives money from the bank, the buyer purchases the goods and the obligation to pay off the debt within the prescribed period, paying a certain amount monthly. In fact, installments and loans are one and the same. The difference is that, when buying in installments, you do not overpay for the goods. And then the question arises: "When making an installment plan, a loan agreement is concluded, in which the interest rate is indicated. The amount of the monthly payment includes interest for using the loan. How is it that the buyer does not overpay for the goods?" In order to provide the client with "0% per annum", the trade organization makes a discount on the goods, and the bankwith its percentage this discount and winds up. That is, all costs are borne by the trade organization. From here it turns out that the client gets the desired thing without any overpayments.
The second option is when the store itself provides the installment plan. This is the "true" installment plan, where the agreement is concluded directly with the seller himself, without any intermediaries. Interest, additional contributions and commissions are not provided for in this type of calculation.
The only thing you have to pay extra for is for reviewing the application and completing all the necessary documents. The cost of this service is set by the stores themselves and is usually included in the total amount of the installment plan.
The second difference between an installment loan and a loan when buying a product is a legal relationship. The contract of sale must be drawn up with the seller. And in case of any claims, it will be necessary to contact him.
The amount that makes up the cost of the goods is paid monthly in equal installments. Most often, in this case, a large part of the down payment is provided (usually at least 30%).
Who can apply for an installment plan?
Different banks have different criteria as to who they are willing to lend to. When registering, more accurate information should be obtained from bank employees. In general terms, a person must have a job, citizenship of the Russian Federation and age from 18 to 65 years.
It is worth noting that most banks do not enter into a loan agreement with people living in regions where their branches are not present anddepartments. In addition, payment by installments for citizens of the Chechen Republic, the republics of Dagestan, North Ossetia and some other southern republics is possible only in the region of registration.
What documents are needed to apply for an installment plan?
The list of documents required for an installment plan largely depends on where it is drawn up. If you purchase goods in a shopping center through a loan officer, then for registration you will need a passport and a second document confirming your identity, to choose from (SNILS, driver's license or military ID).
If the contract is drawn up directly between the seller and the buyer, then in this case a passport and a sales contract will be required. It will indicate the terms of the purchase: down payment, term and amount of monthly payments. Sometimes proof of income or a third party guarantee may be required.
Installment features
How is an installment plan different from a loan? You can buy any product in installments: both household appliances, furniture and fur products, as well as jewelry, and plastic windows. But most often, trade organizations set certain restrictions on installments. Stores hold promotions, according to which, for a certain period of time, it is possible to buy all goods or some limited category of goods in a “loan at 0% per annum”. Therefore, most often the installment plan is just a marketing ploy to increase the amount of visit trafficoutlet.
Which is better: a loan or an installment plan?
When planning to apply for an installment plan, you need to correctly assess your capabilities, since the service has both advantages and disadvantages.
So, about the benefits. Registration takes place quickly, without any strict requirements for the documents provided. There is no overpayment when buying in installments.
If we talk about the shortcomings, then this:
- Short term funding.
- High monthly payments.
Therefore, it is impossible to answer unambiguously the question of what is better: a loan or an installment plan. Everything is determined by your financial capabilities.
What should I pay attention to when buying goods in installments?
The opportunity to purchase goods in installments pleases many. Therefore, not everyone adequately assesses what is happening around them. You should not immediately rush into the pool with your head, you need to take a sober look at the environment. It is possible that the cost of the goods in the outlet offering this service is significantly overestimated. It is worth looking at similar offers in other stores and comparing them with the cost of the goods offered in installments.
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