instalment credit

instalment credit

a contractual means of purchasing a product over an extended period of time using a CREDIT facility provided either by a financial institution, such as a FINANCE HOUSE, or by the firm selling the product concerned. An initial down payment is usually required, followed by monthly fixed payments (including interest charges) over a specified repayment period (e.g. 12 or 24 months, etc.).

One popular form of instalment credit is a hire purchase agreement under which a purchaser takes immediate possession of a product but does not have legal title to that product until all the instalment payments have been made. See CREDIT CONTROLS, MONETARY POLICY, CONSUMER CREDIT ACT 1974.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005