Legal Definitions - credit sale

A credit sale is a transaction where a buyer receives goods or services immediately, but agrees to pay for them at a later date, often in installments, rather than at the time of purchase. This arrangement involves a promise from the buyer to pay the seller, and it typically includes terms regarding the payment schedule, and sometimes interest or finance charges.

Here are some examples to illustrate a credit sale:

• Example 1: Purchasing a new refrigerator on a store credit card.

  A customer visits an appliance store and selects a new refrigerator. Instead of paying the full amount upfront with cash or a debit card, they opt to use the store's financing plan, which involves opening a store credit card. They take the refrigerator home immediately, but agree to make monthly payments to the store over the next 12 months, with interest.

  This is a credit sale because the customer receives the refrigerator (the goods) right away, but the payment is deferred and spread out over time, based on a contractual agreement to pay later.

• Example 2: A small business buying office supplies on account.

  A marketing agency regularly orders printer paper, ink cartridges, and other office supplies from a local stationery vendor. The vendor has an agreement with the agency allowing them to receive supplies throughout the month and then send a single invoice at the end of the month, due within 30 days (often called "Net 30" terms). The agency receives the supplies as needed but pays for them collectively later.

  This demonstrates a credit sale because the marketing agency obtains the goods (office supplies) immediately upon order, but the payment is postponed until a specified future date, as per their established credit terms with the vendor.

• Example 3: Paying for a haircut and styling with a personal credit card.

  A person gets a haircut and styling at a salon. After the service is completed, they present their personal credit card for payment. The salon processes the transaction, and the person leaves. The credit card company pays the salon on behalf of the customer, and the customer then owes the credit card company, which they will pay when their credit card statement arrives, typically within a few weeks.

  This is a credit sale because the customer receives the service (haircut and styling) instantly, but the actual payment from their own funds is delayed until they pay their credit card bill. The credit card facilitates this deferred payment arrangement.