When selling a big ticket item on credit most merchants require that
the buyer undergoes a credit check and provides a down payment. This is to reduce the risk of default on the repayment of the loan. Additionally, merchants may also require the buyer to provide collateral or sign a contract outlining the terms and conditions of the credit purchase. This helps protect the merchant in case of non-payment or other issues that may arise during the credit term.
the buyer meets certain criteria and agrees to certain terms before approving the credit sale. Here are the typical steps involved when selling a big ticket item on credit:
1. Determine the buyer's creditworthiness: Before approving a credit sale, most merchants evaluate the buyer's creditworthiness to assess their ability to repay the debt. This involves checking their credit history, income, employment status, and other financial factors.
2. Verify identification: Merchants may require the buyer to provide valid identification documents (such as a government-issued ID) to confirm their identity. This helps prevent fraudulent transactions and protects both the buyer and the merchant.
3. Complete a credit application: The buyer is usually required to fill out a credit application form provided by the merchant. This application collects relevant information such as personal details, employment history, income, and references.
4. Perform a credit check: The merchant may run a credit check on the buyer by contacting credit bureaus or relying on other credit assessment tools. This assessment helps determine the buyer's creditworthiness and assesses the risk involved in offering credit.
5. Set credit terms and conditions: Once the buyer's creditworthiness is assessed, the merchant sets the terms and conditions of the credit sale. This includes the amount of credit approved, interest rates (if applicable), repayment schedule, and any additional fees or charges.
6. Provide disclosure documents: The merchant should provide the buyer with all necessary disclosure documents, including the terms and conditions of the sale, interest rates, repayment schedule, any penalties for late payments or defaults, and other relevant information.
7. Obtain buyer's agreement: The buyer must review and sign the credit agreement, acknowledging that they understand and agree to the terms and conditions set by the merchant. This agreement legally binds both parties to the credit sale.
8. Process the sale: Once the buyer's credit is approved and all necessary documents are signed, the sale can be processed. The merchant can then deliver the big ticket item to the buyer, and the buyer can take possession of the item.
It's important to note that specific requirements and steps may vary depending on the merchant's policies and local regulations.