Installment loan what. Differences between a loan and an installment plan from the borrower's point of view. Isn't installment an interest-free loan?

Consumer lending is a popular service that provides the opportunity to purchase goods for which personal savings are not enough. Many trading companies offer several transaction financing schemes. A potential client can use classic lending or installment plans. To do this, you will have to contact the trade organization, discuss all the issues of interest with the store employees and sign an agreement, the maintenance of which will be handled by commercial Bank.

Customer credit

The confusion between personal loan and installment loan arises due to the similar parameters that both financing mechanisms have. Installment plan- this is a separate type of lending, which has the most favorable conditions for the client, but consumer loans also have extremely advantageous features.

Bank loan- a classic financial product that is provided on the terms of repayment, urgency (a strict payment schedule is established) and payment (interest rates and commission charges are specified in the agreement). The loan size always depends on the current tariff policy bank, so sum of money The amount that can be borrowed is limited by the credit limit.

Peculiarities consumer lending in the bank:

1. Strict financing conditions for clients.
2. Intended use. If the borrower does not indicate the purpose of the loan, the cost of the loan increases.
3. Use of collateral (pledge, surety) in order to reduce the cost of the transaction.
4. A fixed amount of regular payments, including commissions and interest charges.
5. Clear time limits for the validity of the agreement (from one day to several decades).

When applying for a consumer loan, the lender is a commercial bank or trading company through which the borrower plans to purchase goods. Specific conditions and nuances of the future transaction are prescribed in the loan agreement. The size, term and cost of the loan are calculated by the financial manager based on reliable data provided by the borrower in the application.

On average, it takes from 12 to 36 hours to review and approve an application. Commercial bank employees assess the client's level of solvency by carefully studying the information provided in the application. You can instantly get a loan only by completing a transaction via the Internet. In real time, a potential borrower has the opportunity to apply for bank loan, but to conclude a transaction you will have to personally visit the office of a financial institution.

Installment plan

Payment for goods and services by installments is a popular method of registration commercial loan with extremely favorable financing conditions. The borrower can agree on the parameters of the transaction and then sign the agreement directly in the store. After making a down payment, which usually exceeds 10% of the loan amount, the borrower can receive the selected product at his disposal.

Features of installment plan in the store:

1. The duration of the agreement is often limited to 12 months.
2. Low interest rates.
3. Payment is made in installments, sometimes even without interest.
4. The buyer becomes the owner of the goods only after making the last payment.
5. Flexible repayment schedule, usually requiring the client to make monthly payments.
6. No collateral or other form of security.

Getting an installment plan is not so easy. Typically, lenders raise the entry threshold for a borrower by deliberately tightening the requirements. There is a constant increased demand for such a transaction, since this form of financing has many advantages compared to a classic bank loan. Among the popular credit products, installment payment is also distinguished by its simplified registration system. Often the borrower only needs to provide passport information.

In the store, a few minutes are allotted to review the client’s application. An employee of a trading company or financial institution who will decide to issue a loan will additionally discuss with the client a comfortable schedule for making regular payments. A flexible repayment schedule is formed based on the needs and wishes of the borrower, thereby making the loan repayment process more comfortable.

What is better: loan or installment plan?

The main difference between a standard bank loan and an installment loan is the accrual of interest. In consumer lending, the borrower is required to pay the agreed interest rate, whereas in installment financing, only the principal amount must be repaid.

Of course, installment plans are much more profitable for the borrower, but obtaining them can be an annoying problem. The fact is that this form of financing is usually provided only by large stores. To make money from selling goods, trading companies can deliberately inflate the cost of products or introduce additional services that are useless for the client (paid guaranteed service). As a result, the installment plan will not be much more profitable than the standard lending scheme.

Before applying for an installment plan you must:

• Study reviews about the company with which you plan to enter into an agreement.
• Familiarize yourself with the terms of the future transaction, paying attention to financial issues and additional services.
• Discuss the parameters of the future agreement with the credit manager.
• Pay attention to the debt repayment schedule.
• Familiarize yourself with penalties for violating the terms of the agreement.

We bring to your attention 4 credit cards with the possibility of interest-free installments:

Companies that provide goods at prices favorable to potential customers face a significant risk of non-refund. If a loan is obtained by an unreliable borrower, the seller risks facing serious losses. The trading company, in turn, loses the opportunity to compensate for the loss of profit by increasing interest payments. As a result, many potential lenders are turning away from this financing scheme in favor of standard lending methods.

Why do sellers use installment plans? First of all, this service can significantly increase sales. It is also actively used to attract customers. Many potential customers come to the store after major marketing campaigns, the hit of which is the offer of interest-free installments. With all this, the borrower must understand that free cheese can only be found in a mousetrap. The store may indeed be responsible for paying the interest, but in order to obtain benefits, the bank may impose expensive insurance and large transaction fees on the borrower.

31 Oct

What is the difference between a loan and an installment plan?

Sometimes the only way to buy an expensive item is to use a bank loan. And many consumers have already experienced the pros and cons of this procedure. However, recently more and more stores offer to purchase goods from them in installments. At first glance it seems that there is no fundamental difference, but is this true?

Installment plan and loan: what is the difference

1. Installment payment is a method of purchasing goods in which the buyer is given the right to pay for the purchase in equal installments over a certain period of time.
2. Bank loan is an amount that a bank lends to a client to purchase goods for temporary use at a certain percentage.

It turns out that the first difference in concepts is the presence of interest payments to the bank for providing the loan service. But the difference is not only this, so let’s take a closer look at each type of transaction.

What is installment plan and what are its features?

In accordance with the Civil Code, installment payment is a transaction in which special payment conditions are determined, namely, the purchase amount is divided into several payments and postponed for a certain time. In this case, the product or service is provided to the client upon completion of the transaction. Features of installment plan:

1. The subject of the contract can be any product, but most often it is expensive property.
2. Selling goods in installments does not imply any additional charges. However, the seller may slightly increase the cost of the item in case of inflation.
3. The terms of the transaction are negotiated between the seller and the buyer and can be changed by common agreement after the conclusion of the contract.
4. Purchasing goods in this way requires making a down payment of 20-30% of the purchase amount.

To protect the interests of the parties to the transaction, an official document is used - an installment agreement. In addition to the terms and conditions for the return of funds, it describes other aspects of the transaction. For example, the procedure for returning goods if a product is found to be defective. There are no legal requirements for this type of relationship, and it is more in the interests of the seller, since the buyer in this case does not risk anything. Terms of the installment agreement:

1. When concluding a transaction, the collateral will be the goods purchased under the contract.
2. Until the client pays the last amount of the debt, he is the user and not the owner of the purchased property.
3. If the debt is not repaid by the specified period or interim payments have stopped, the seller may withdraw the item.
4. If payments stop after more than 50% of the total cost has been paid, then the parties decide among themselves exactly how the remaining amount of the debt will be repaid.

Another important point you need to know is that the installment agreement is governed only by the Civil Code. And if after a while the seller voices new demands under the contract, then it will be possible to defend their interests only in court. This is the main difference from loan agreements, which are regulated by the Bank of Russia. That's why it's important to know what an installment plan is and how it differs from a loan.

What is needed for installment payment? The seller has the right to independently determine the conditions for providing installment plans to the buyer. Therefore, in one case it is enough to present only a passport, but in another it is necessary to prepare a whole list of documents confirming the decency and reliability of the client. The most common set of documents includes a certificate of employment and a personal income tax certificate confirming solvency.

Features of a bank loan

Typically, banks are interested in issuing loans, since it is this service that brings them the main profit. Depending on the intended purpose The most popular types of loans are highlighted:

• to purchase a car;
• for business development;
• mortgage;
• consumer.

If we are talking about large amounts, financial institution requires the borrower to provide collateral in the form of real estate, a car or other valuable items. This step minimizes risks banking organization. When applying for a consumer loan, the bank becomes a link between the seller and the buyer, providing money to complete the purchase. Such an operation is interesting for all three participants in the transaction: the buyer receives the desired product, the seller receives money for the sale, and the bank receives a commission for using the loan.

The only drawback for the client is the need to pay monthly interest, as a result of which the final cost of the purchase will significantly exceed the amount stated in the store. However, in this case, the transaction remains transparent, and all calculations can be read in the loan agreement.

Important! Employees of any bank can make a preliminary calculation of monthly loan payments. Thanks to this service, the client can consider the profitability of the transaction and compare it with the conditions of other banks.

Features of concluding an agreement with a bank

To receive a loan, the client must provide the bank with a list of documents, which are checked for several days before the lender makes a final decision. The amounts of monthly contributions are strictly fixed and tied to a specific date of the month by which payment must be made. If one of these conditions is violated, the borrower will be subject to penalties.

The agreement with the bank specifies the interest rate, terms for the return of funds, penalties for failure to comply with the terms of the agreement, the rights and obligations of the parties involved in the transaction. According to the agreement, the client is assigned the status of a borrower, and information about his reliability is sent to the Credit History Bureau. If a client does not make payments on time, this will affect his credit history and he may be denied a new loan in the future.

It is very important to close the loan after paying off all the debt and obtain a document confirming this fact. Otherwise, even a small amount of debt can turn into a huge fine over time.

Pros and cons of installments compared to a loan

When talking about purchasing goods on credit or in installments, it is important to study the features of each type of transaction and choose more acceptable conditions for yourself. Advantages of installments:

1. No interest charges for using the loan. This is often the main criterion in choosing between a loan or installment plan. However, you need to carefully read the terms of the contract for other expenses: insurance or commission upon receipt of the goods.
2. Speed ​​and ease of registration. The transaction is concluded directly between the seller and the buyer without the involvement of an intermediary in the form of a bank. In this case, the buyer usually only needs to present a passport. Concluding an agreement with a bank involves collecting and preparing documents, creating an application, and waiting for the bank’s decision.
3. Possibility of obtaining a loan even with a bad credit history. The store rarely checks the buyer's integrity and solvency. In the case of a bank, failure to repay a loan on time may become grounds for refusing to issue a loan.
4. Possibility of replacement or return to the store. In this case, the seller can quickly return the money paid for the purchase to the buyer.

The disadvantages of installment plans include:

1. Making a down payment as an advance. In the case of a loan, the down payment is paid only in the case of a large purchase - a car or real estate. With normal consumer loans You can take out a loan for the entire cost of the goods.
2. Short debt repayment terms. The maximum installment period usually does not exceed one year. According to the loan agreement, the total amount can be repaid over about 3 or 5 years.
3. Hidden Tricks, increasing the cost of goods purchased in installments.

It is difficult to judge which is better - installments or credit, since everyone chooses convenient conditions for themselves. However, to accept correct solution, we need to study the issue even deeper.

What you need to know about installments

How does installment differ from store credit? First of all, the legal formalization of the relationship between the seller and the buyer. If in the first case the buyer enters into an agreement only with the seller and on his terms, then in the second case an agreement is concluded with the bank.

Installment plans attract buyers, first of all, due to the absence of interest charges for using the loan. There is a feeling of savings due to deferred payment. In fact, what sellers promise is not always true. And under the guise of an installment plan, a loan that everyone is familiar with is often issued. Real installment plans with deferred payment are an extremely rare occurrence. Therefore, you need to more carefully review the terms of purchase or the store’s price offer.

Example. Installment plans are provided during promotional discounts on goods in the store. However, there is a caveat that the discount does not apply to purchases in installments. It turns out that buying goods for cash is more profitable, but the price of goods purchased in installments already includes hidden interest.

By the way, the amount of overpayment is not controlled by anyone, unlike a bank loan, the interest of which does not exceed the maximum interest rate established by the Bank of Russia.

Bank installment plan

Although banks are not allowed by law to provide a pure installment service, you can increasingly see advertisements with similar offers. They describe the terms of a bank installment plan with zero prepayment and no interest rate. Moreover, the repayment period for the debt may be longer than in the store.

After consultation bank employee There are no doubts about the veracity of the information, and there are no additional payments either. However, in reality, this is the same loan, only in this case the interest is paid not by the client, but by the store, which most likely has already invested this amount in the cost of the goods. It turns out that in any case the costs are borne by the client, no matter how beautifully this fact is veiled.

In this way, the store increases its sales, because it is easier to sell goods in installments than at full price. In this case, the bank will also not miss the opportunity to make money, and may try to sell expensive insurance to the client.

How to distinguish a loan from an installment plan

There are often situations when banks, wanting to attract new customers, offer the store an agreement: the seller provides the buyer with a discount on the product along with an offer to order favorable loan in the bank. Later, the discount is offset by interest paid on the loan. But in an unstable economic situation, people tend to look for more profitable terms and they resort to the installment plan service. In fact, banks can issue a regular loan under the guise of an installment plan. And even knowing well what installment means; at first glance it can be difficult to distinguish. How to determine a loan issued under the guise of an installment plan:

1. A bank employee takes part in the execution of the agreement, and the bank acts as an intermediary of the transaction.
2. Instead of a standard installment period, the store offers more flexible repayment terms - from a year or more.
3. The seller insistently offers to issue credit card, which clearly indicates the intention to apply for a loan.
4. As a result of calculations, additional payments or commissions are added to the installment amount.

Based on this, we can once again conclude that installment payment is an agreement only between the store and the client; no intermediaries or third parties should be involved. After breaking down the payments, the original purchase amount remains the same, there are no commissions or additional payments.

Advertising, various promotional discounts, and the appearance of improved new products on the market make a person feel the desire to purchase the product of interest. Even if there is no money for a purchase at the moment, not everyone wants to save for later, wait until such an opportunity arises.

Thanks to modern financial relations, any dream is possible, there are two ways to do this - applying for an item on credit, getting an installment plan. There are certain differences between these concepts that are often confused by consumers. Let's figure out how installment plans differ from loans

Cases by installments

The buyer can take advantage of the installment plan, for which he must make a certain amount of down payment. The remaining portion is paid over several months in equal installments.

This service is provided only by stores engaged in the sale of the item of interest to the citizen, and can be issued for a period from ten days to six months. For more expensive goods, installment plans can last several years, for example, when purchasing.

If the next payment is not made to the cashier on time, the seller has the right to return the goods back.

Exists an exception in which the purchase can be kept by agreement of both parties. This is possible when the consumer has already paid more than 50% of the total cost. Then an agreement is concluded between the trading establishment and the client on the methods and timing of debt repayment.

Installment plans have certain disadvantages, which are as follows:

• If the purchase is not fully paid on time by the borrower, then the seller or manager who completed the transaction will have to answer for the current situation;
• Sellers very rarely agree to extend the installment plan, since it is not profitable for them, because they receive a certain percentage from the sale;
• The consumer begins to use the goods received in installments only after a few days;

Guarantees payment of debt in installments the item itself purchased by the citizen. The consumer pays only the retail price of the purchased product without any interest or insurance.

Credit offers

Issuance of loans banks are involved. Some stores may have staff located credit institutions, if the client does not have enough own funds to purchase, you can contact them to get a loan.

Wherein a corresponding agreement is drawn up, which indicates the period for which the loan is issued, the percentage of the loan amount that the client must pay. The bank receives it for its services.

When the consumer, for any reason, stops fulfilling the terms of the contract in a timely manner, monthly payments stop being received, purchases from the store are not refundable.

The procedure for collecting the remaining loan amount from the debtor along with interest on it is determined by the bank, up to and including legal proceedings. In this case, it does not matter how much money the consumer managed to pay.

Loans come in various types, most often these are:

Most banks where a client applies to obtain a loan, require a money back guarantee, which is secured by paying a deposit.

This can be any property of the borrower (both movable and immovable), jewelry, shares, bonds, and other securities of value. Sometimes, with a very large loan amount, the consumer must find a guarantor.

Applying for a loan requires providing a large number of documents, filling out a special application, various forms, after which the relevant service checks how solvent the client is.

Only then is a decision made on issuing funds or refusing a loan to the citizen.

In addition to the amount borrowed from the bank, a person has to pay additional funds - interest on the use of finances established by this organization, an insurance premium.

Loans are issued as individuals, and legal, has a corresponding focus. The terms can be very different, according to the current program of banks. The minimum is 30 days, the maximum reaches 30 years. Funds are issued to the borrower by the lending institution, either own or borrowed.

Main differences: which is better - one or the other?

The store provides installment services, while a loan is issued by a bank when concluding an agreement on lending to an individual or legal entity.

When repaying the loan debt, it is provided payment of interest for using bank funds. The installment plan does not have such a clause.

When the monthly fee has not been paid, the trade organization has every right to insist on returning purchased goods back.

Banks are not interested in this option¸ so they are doing refunds of issued funds in various ways, trying to negotiate peacefully with the debtor or filing statement of claim to the judicial authorities.

The purpose of an installment plan and a loan, what is the difference between them, is obvious. They help a person purchase goods when he needs them, without waiting for his own funds to become available.

The citizen himself decides what to use., since both methods have their own advantages and disadvantages.

Finally, we suggest you take a look at the video about how people can deceive you when applying for an installment plan or a loan:

In contact with

Many stores offer to purchase goods in installments. Until recently, such an opportunity was assumed only in large retail outlets selling expensive goods, for example, household appliances, furniture, and interior parts. Now installment plans without overpayments are featured on the banners of most even medium-sized and small shops. This service is also offered by some food chains, especially during public holidays. It’s worth understanding what installment plans are and what tricks sellers are hiding.

Installment is payment in installments

There are some specific features when purchasing goods in installments. Let's start with the fact that installment plans are not a loan. The agreement is drawn up in a completely different format. However, no banks appear in this document as lenders or creditors. Installment payment is the repayment of the cost of goods in certain installments over a certain period of time. If your agreement specifies interest for the use of issued in cash, the financial transaction carried out by installments can no longer be called. In this case, commissions may be present: their features will be discussed below. However, no interest rates there shouldn't be.

Difference from loan

Installment payment is the repayment of debt to the seller for the purchased goods by making payments for a certain period of time specified by the terms of the contract. This agreement is concluded directly with the store, without the participation of bank lending systems. That is, in one part of the contract your information as a buyer is entered, and in the other - the details of the trading organization from which you purchased the goods. A purchase and sale document must be drawn up, which specifies the terms after which the client undertakes to repay the cost of the purchased item. Interest for use credit funds are not included in such an agreement. Therefore, installment payment is a more economical option for purchasing necessary goods.

Installment plan with the participation of the bank

If a third party does appear in the contract, some financial structure, it means that either you are being deceived, or there are additional points that you should carefully study and understand the information provided. Some large stores actually issue credit offers from partner banks for their own installment plans. In this case, the consumer benefit decreases significantly. If, when applying for an installment plan, you are directed to bank counters, carefully ask the representative about the terms of the installment plan provided, about possible payments and commissions. Better yet, carefully study their sample contract yourself.

The consultant is instructed in such a way as to attract clients, and not to scare them off with frank information about the amounts of overpayments, and therefore may withhold important information. The contract, according to the law, must indicate absolutely all payments, the total amount of commissions and overpayments, and their percentage expression. An installment plan without overpayments with the participation of a bank is indeed rightfully called an installment plan if the contract states that the store makes a discount on the purchased goods in the amount of interest for using the bank’s funds. In this case, the buyer actually purchases the goods at the previously stated price, without overpaying for using the loan.

The contract and its execution

The relationship between the seller and the buyer is governed by an installment agreement. This document displays all the rights and obligations of both the buyer and the seller. The period for which the client undertakes to pay the cost of the goods, the commission for processing and reviewing the service, the penalty, as well as the amount of monthly amounts to be paid is agreed upon. The contract may indicate the buyer as the borrower and the seller as the lender. However, this does not change matters. This does not make the agreement a credit agreement. The installment plan cannot take into account penalties for late payment or early repayment of the debt. Only a specified penalty can be collected within the limits established by the state for improper performance of obligations.

Documents for registration

There is no regulated list of documents reflected anywhere. Each seller has the right to draw it up independently. This means that the reasons for refusal can also be very different. To take anything in installments, you may need the following list of documents confirming your identity and income: a passport with permanent registration, a certificate from the place of employment in form 2-NDFL or free (depending on the requirements of the seller), information about property and real estate, belonging to the buyer, information of persons ready to vouch for the client, telephone numbers from the place of residence and work, information about existing loans and debts.

The buyer can be refused at any time if the administration is not satisfied with any point of the questionnaire. Perhaps yours workplace will be considered an unreliable source of income or it will be too little. The lack of landline telephone numbers from the place of residence and the employing company is also often a reason for refusal. Do not forget that when signing an agreement, the store has the right to contact the Bureau Credit Histories, in order to obtain information about the borrower's responsibility.

Restrictions on installment plans

You can buy any product in installments, however, most often these are high-price products. These include furniture, household appliances, branded clothing and shoes, digital equipment, materials for construction and repair, jewelry, and so on. The prices are set by the seller. The installment plan does not provide for interest, but there may be fees for filling out the application form and reviewing the application. Typically, the installment date is limited to two years. The most commonly used interval is six to twelve months. Sometimes the installment plan can be up to three months. Installment plans without a down payment are practiced quite often in household appliance stores, but in others, an initial fee usually ranges from 30% of the purchase amount.

Commissions, overpayments

Applying for an installment plan through a bank is a more expensive undertaking. You should not agree to issue the card. This will entail additional costs for servicing your personal account. In addition, the installment plan cannot contain commissions and penalties for late payments in the contract higher than those established by the state maximum bet. The state has established the following rule when calculating penalties: 1/300 of the current refinancing rate per day. At the moment it is 11 percent. 11/300=0.0367% of the debt amount per day. If you have a debt of 30,000 rubles, you will only have to pay 11 rubles per day of delay. Compared with bank fines- this is a ridiculous amount.
In addition, banks often issue insurance for loans, which significantly increases the overall result. Remember that according to the law, you have the right to refuse it or write a statement and demand personal funds back upon expiration of the contract and the completion of all payments.

Installment plan at Eldorado

Let's look at the installment plan at the Eldorado household appliances store as an example. Installment plans at Eldorado specifically apply to cases where a bank is included in the agreement. Store offer terms: down payment – ​​0%, account maintenance fee – 0%, provisioning fee – 0%. Installment plans are issued in amounts from 2 to 150 thousand rubles. Its duration can range from six months to two years. The partner of the Eldorado chain of household appliances and electronics stores is financial institution"Alfa Bank". To apply for an installment plan, you will need a passport of a citizen of the Russian Federation, as well as one of the following documents to choose from: foreign passport, driver’s license, SNILS or TIN. Please note that when you purchase an installment plan, discounts and promotions are removed from all products. This is done because a discount in the amount of interest for using Alfa-Bank credit funds is expected. Otherwise, it will simply be unprofitable for the store to sell you the selected product. The bank gives consent to arrange the installment plan. But the decision to include an insurance payment in the package remains with the client.