GLOSSARY: Payment plans
What does the term ‘Payment plan’ mean?
A payment plan can refer to paying off any outstanding debt, or sometimes more than one debt by means of consolidation into an organized payment schedule. Alternatively, different types of consumer financing involve a payment plan, such as car loans and point of sale retail loans. Within a payment plan for financing, the consumer pays back a fixed amount of money every month until the balance is cleared. Credit cards require a more flexible payment plan, where there is a minimum required payment per month, and the borrower can decide how much to pay back and when.
Traditionally, a payment plan would have referred to a monthly amount being paid directly to the retailer as part of an installment schedule, in advance of receiving the merchandise.
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