The arrangement where a seller, rather than a traditional lending institution, provides the funds for a purchase is known by several names, all describing the same fundamental process. This type of funding allows a buyer to obtain goods or services directly from the seller while agreeing to repay the purchase price over time, typically with interest. A car dealership offering installment plans directly to customers, bypassing banks and credit unions, exemplifies this financing method.
This practice can be particularly beneficial when traditional lending options are limited or unavailable to the buyer. It simplifies the acquisition process and potentially offers more flexible terms compared to conventional loans. Historically, variations of this direct lending have existed across numerous industries, particularly in real estate and retail, where sellers aimed to expand their customer base and facilitate sales.
