Understanding Installment Buying

What are the advantages of installment buying?

• Increases the cost of the item

• Allows purchase of expensive items without paying full amount upfront

• Requires a large down payment

• Limits the choice of products available

What are the disadvantages of installment buying?

• The disadvantages of installment buying include higher overall cost due to interest, potential debt accumulation, and the risk of default and repossession.

• Lower overall cost due to interest

• No risk of default and repossession

• Decreased potential debt accumulation

Name three types of installment buying plans.

• Credit card installment plans, layaway, layby

• Renting, leasing, mortgage

• Layaway, credit card installment plans, personal loans

• Cash payment, layaway, barter system

How does credit score affect installment buying?

• It affects the interest rate and approval for installment buying.

• It has no impact on installment buying

• It only affects the length of the installment plan

• It only affects the down payment for installment buying

What are the legal aspects to consider in installment buying?

• Not checking the terms and conditions of the purchase

• Making sure to always pay in cash

• Compliance with consumer protection laws and regulations

• Ignoring all consumer protection laws

How can one effectively manage installment buying debt?

• Ignore the debt and hope it goes away

• Take on more debt to pay off the existing debt

• Make only the minimum payments each month

• Create a budget, prioritize payments, negotiate lower interest rates, and avoid taking on new debt.

Explain the concept of 'interest-free' installment buying.

• The buyer can pay for a product or service in multiple installments without incurring any interest charges.

• It refers to the buyer paying for a product or service in installments with decreasing interest rates over time.

• Interest-free installment buying means the buyer has to pay the full amount upfront.

• The buyer can pay for a product or service in multiple installments with high interest rates.

What are the potential risks of using installment buying for large purchases?

• Low interest charges and easy payments

• The potential risks include financial burden, high interest charges, and defaulting on payments.

• Minimal risk and increased savings

• No financial burden and guaranteed approval

How does installment buying differ from traditional credit card purchases?

• Traditional credit card purchases do not involve any interest

• Installment buying requires payment in full at the time of purchase

• Installment buying and traditional credit card purchases are the same thing

• Installment buying involves making a series of payments over time to pay off a specific purchase, while traditional credit card purchases allow the consumer to make purchases and pay off the balance over time with interest.

What are the consequences of defaulting on an installment buying agreement?

• Discounts on future purchases

• No consequences at all

• Increased credit limit

• Consequences include late fees, damage to credit score, repossession of the purchased item, and legal action by the lender.