BOUGHT ON CREDIT Meaning and
Definition
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The term "bought on credit" refers to the practice of acquiring goods or services with the understanding that payment will be made at a later date, often after a specified period of time. It is a financial transaction in which the buyer obtains immediate possession of the desired item while deferring the payment until a future date. This arrangement is typically facilitated through the extension of credit by a lender, such as a bank or a seller who offers credit terms.
When an individual or a business entity buys on credit, it means they are essentially borrowing money temporarily to complete the purchase. The credit terms may vary depending on the agreement between the buyer and the lender, with interest charges sometimes applied to the outstanding balance if the repayment period exceeds a predetermined timeframe.
Buying on credit can offer various advantages to both consumers and businesses. It allows individuals to make necessary purchases even if they do not have the full amount of cash readily available. For businesses, buying on credit can contribute to boosting cash flow and ensuring a steady supply of essential goods or services to maintain operations.
However, it is crucial for buyers to carefully manage their credit purchases to avoid acquiring excessive debt or facing financial difficulties. Understanding the terms and conditions of the credit agreement, such as interest rates and repayment schedules, is essential to ensure responsible financial management when buying on credit.
Common Misspellings for BOUGHT ON CREDIT
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