Which term describes a contract with retailers to repay the purchase price plus finance charges in equal regular payments?

Which term describes a contract with retailers to repay the purchase price plus finance charges in equal regular payments?

• A. Open Ended Credit
• B. Open Thirty-Day Account
• C. Layaway Plans
• D. Installment Purchase Agreements

Answer: (D)

The idea here is fixed, equal-payment financing arranged through a retailer. In an installment purchase agreement you buy the item now and agree to repay the purchase price plus any finance charges in regular, equal payments over a set period. Each payment covers part of the principal and the interest (finance charges), so the total amount paid exceeds the sticker price. This is different from open-ended credit, where you borrow against a revolving line and payments can vary; a 30-day account is a short-term, usually one-time due date; and layaway involves paying in full before you take the item home, not repaying over time.

The idea here is fixed, equal-payment financing arranged through a retailer. In an installment purchase agreement you buy the item now and agree to repay the purchase price plus any finance charges in regular, equal payments over a set period. Each payment covers part of the principal and the interest (finance charges), so the total amount paid exceeds the sticker price. This is different from open-ended credit, where you borrow against a revolving line and payments can vary; a 30-day account is a short-term, usually one-time due date; and layaway involves paying in full before you take the item home, not repaying over time.