GLOSSARY: Pay over time shopping

How can I offer my customers ‘Pay over time shopping?’ 

Options for financing your customers for ‘Pay over time shopping’ have increased over the last few years and now covers a number of ways: 

      • Layaway – Traditionally, customers that wanted an item but didn’t have the immediate funds or want to use a credit card, could use layaway. Using a layaway plan,  the customer puts down a deposit for an item, then makes monthly payments until the item is paid for in total and can be collected. Consumers nowadays demand their merchandise immediately, decreasing the popularity of layaway.
      • Credit card – The most enduring form of credit, credit cards allow customers to take their purchase home straight away and pay it off as an when you can, as long as you meet the minimum payment. Credit cards have suffered damage to their reputation with high APR rates and by charging astronomical fees following any ‘interest-free period.’ 
      • Installment loans. The most recent form of credit allows the customer to take the item home and pay it back over time using monthly installments. Unlike credit cards, there is a finite period of time, and the customer knows exactly how much interest they may be charged if they make all the repayments on time.

        What are the various methods of ‘Pay over time?

        The term ‘Pay over time’ is referring to the action by which the consumer is able to pay for an item using some form of credit, and then pay the money back over time in installments. These are the various ways in which credit can be given in order that the customer can pay for their purchase over time:

        • Credit cards traditionally create a debt which can be paid back in a way that the customer decides, as long as they meet the minimum payment each month. However, the growing popularity of installment loans with the younger generations means that credit card companies are starting to offer a more fixed, interest-free way to pay off credit card debt. 
        • Installment loans are taken out at the point of purchase and involve the customer receiving their item straight away. The customer will know at the point of taking out the loan what the repayment terms are, and what the complete interest charged will be, although sometimes the customer doesn’t need to pay interest.

        Certain charge cards, such as one by AMEX offers the service of paying the debt in installments, rather than expecting the entire amount to be paid in total. Interest is charged on the remaining debt.

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