The global financial crisis has led to a sharp decline in the purchasing power of our compatriots. Therefore, today an increasing number of citizens who do not have a sufficient amount for the purchase of certain goods are interested in what installments are.
Features of such a program
Many ignorant citizens often confuse installment plans with credit. In fact, these are two completely different programs that have only a slight similarity between themselves. So what is installment plan? And what are its main features? This program is designed to purchase all kinds of goods or services. Installments are issued for a short period and exclusively on the security of the purchased goods. Unlike a loan, interest is not accrued on it. If the borrower does not pay the minimum installment, then the bank has the right to withdraw the collateral. As a rule, installment conditions provide for the possibility of early repayment.
Installment apartments: how profitable is such a deal?
Most people who are unable to purchase their own housing, try by any means to bring the long-awaited housewarming closer. Some of them draw up a mortgage, while others are looking for more profitable ways.
To buy an apartment by installments, you do not need to collect numerous certificates and confirm your income. In addition, the borrower is exempted from the need to pay high interest, as in the case of housing loans, and also gets the opportunity to invest in real estate without any overpayments. Those who are interested in what an installment plan is and how it differs from a regular mortgage will be curious to know: this program does not provide for additional payments in the form of insurance of possible risks. In addition, developers do not check the real income and credit history of buyers. At the same time, few buyers pay attention to the fact that in case of non-payment of the remaining amount there is a risk of losing the purchased apartment. After all, housing will become the property only after paying off the full cost.
What conditions do developers offer?
Companies specializing in housing are seriously concerned about finding opportunities for quick implementation of facilities. After all, the lion's share of profit is invested in the further development of the business. Most developers offer a scheme according to which the buyer pays the full price of the apartment in equal parts over time. Typically, such installments are issued for a period of two months to three years. Of course, if you want, you can find companies offering to stretch payments for a longer period. But in this case, the interest will not differ much from those that are set in banks. The down payment can be from 30 to 70%, a lot depends on the period for which the program is designed. In the case of long-term obligations, this amount can be reduced to 30-40%.
Installment car
One of the most sought after loan products is considered a car. This is due to the fact that few who want to buy it are able to immediately lay out the full cost of such an expensive product. Today, bank representatives offer a variety of car loans, differing in terms, availability of down payment and interest rates. However, most people who know what installments are, prefer to use this particular program. To make such a purchase, it is not necessary to contact the bank, you can do this directly at the car dealership.
Who and under what conditions has the right to apply for an installment plan?
Those who have definitely decided that they need a car in installments will not hurt to find out who exactly can use this program. Only a citizen of the country in whose territory a car is purchased can make a deal. The buyer must be over 18, but less than 65 years old.
The terms of the transaction depend on the conditions under which the bank and car dealership cooperate. It is they who must agree among themselves on the possibility of annulling the annual interest rate for their customers. As a rule, the most favorable conditions can be found in those salons where manufacturing companies provide significant discounts on selling prices. Such machines are sold with a minimum down payment. An installment sale is executed on the basis of the following documents:
- a notarized photocopy of the driver’s license;
- a photocopy of the applicant’s domestic passport;
- customer profile indicating all of its data;
- Application for registration by installments.
The main advantages and disadvantages of installments
First of all, shops, salons and developers significantly increase sales and save on storage costs. Installment without installment – This is one of the best ways to attract customers. In addition, this program not only allows you to get higher incomes than with regular sales, but also provides the planned cash flow over a certain period.
The benefit of the buyer lies in the absence of the need to immediately lay out the entire purchase price. This service is available to almost everyone. To use it, you do not need to spend a lot of time and effort collecting the necessary documents. Installment in the bank does not provide for the provision of collateral. In this case, the purchased item itself will be considered as collateral.
One of the main advantages of such a deal can be considered the convenience of debt repayment. As a rule, stores provide a fairly flexible payout schedule. An important factor that attracts most potential buyers is the low interest rate, and sometimes its complete absence.
The disadvantages of such a program include the risks of the seller associated with the possible dishonesty of the borrower. In addition, the client has the right to ask for an extension of the maturity, which is also extremely disadvantageous for the seller’s business. Therefore, all such risks are often laid in the final cost of the goods.
Features of bank installments
Such a program is somewhat different from those offered by sellers or manufacturers of goods. In installments provided by the manufacturer or seller, the full value of the goods is divided into several payments without any overpayments, while financial institutions cannot issue interest-free loans. Therefore, in bank installments, in any case, a small percentage is provided (not more than 0.01%). Many buyers who have received a loan agreement are perplexedly asking where the significant overpayment comes from.
Why do overpayings actually appear?
Unfortunately, the vast majority of buyers are completely unaware of certain financial subtleties. Therefore, it is not surprising that they simply do not notice the insurance offered in 95% of cases. In addition, in some contracts additional services are prescribed, including SMS banking, which monthly reminds the client of the need to make a mandatory payment. All these services are provided on a paid basis, which turns the installment taken by the buyer into a regular interest loan. Therefore, before concluding a contract, it is necessary to inquire about the availability of additional services, and if any, refuse them.
The next common reason for overpayment in installments is considered to be a ban on premature repayment of debt. Therefore, in the process of making a purchase, you should definitely ask a loan officer about the conditions for early repayment. To get a truly interest-free installment plan and to avoid possible overpayments, it is recommended that you carefully read all the papers and do not hesitate to ask a representative of the bank.
