Unless you take a loan from a well-established institution, buying a piece of expensive furniture might cost you dearly. However, with an installment purchase agreement, you can easily own a piece of dream furniture by paying affordable small and periodic installments. In other words, an installment purchase agreement allows buyers to hold expensive items they would otherwise not afford if they were to buy them once. For instance, you can buy a large piece of land within three years or so by progressively paying a few monthly dollars. However, you must agree with the seller on the terms you will be using so that you and the seller can benefit from the agreement. 

How an Installment Agreement Works

In an installment agreement, both the seller and the buyer benefit from the payments-especially if the purchase price is spread over time. The payments and the timing can be structured critically to ensure that both the needs of the buyer and the seller are met effectively. In other words, the payment can be timed in an excellent way to coincide with the buyer’s projection in terms of available grants and donations. There are different arrangements where the seller and the buyer avoid extra fees and interest rates that banks and other lenders charge. In this case, the seller only quotes a price that includes their profit and the cost of manufacturing these goods. In this case, the seller holds the property until all the payments are made. However, the seller cannot resell the property unless the buyer requests them to do so.

Other Considerations

All the taxation or any levies that ought to be submitted must be included in the pricing, where both the sellers and the buyers have to share the cost. However, this largely depends on the pricing of the item in question and whether it requires shipping or not. 

Merits of using Installment Purchase Agreement

In most cases, the seller quotes a higher price than cash selling. In other words, the seller must consider the charges of keeping the item until all the payments are made. Therefore, the seller earns more profits when all the prices are done. However, all these are achieved when the buyer remits all the installments in time without unnecessary delays. But, the seller must not resell the products as this can create wrangles that might cost the buyer and the seller dearly.

Merits to the Buyer

Although the cost of buying an item under an installment agreement is relatively high, the buyer benefits from the fact that they will be able to own a property they would not otherwise afford if other terms of payments were employed. In other words, the art of spreading the payment of an item benefits the buyer to a greater extent as they can make payments of small and affordable installments that are widely spread over a long period. This allows prior planning, and the buyer does not feel the pinch of paying a large sum of money. 

Bottom Line

An installment purchase agreement benefits both the seller and the buyer, primarily if the pricing of the property in question is spread over an extended period.