28+ Sample Installment Contract Templates

What Is an Installment Contract?

Picture out a situation where you are in awe of a $5,000 designer dress. You might say it looks perfect for an upcoming big party this weekend. Since you cannot pay it now, you agreed with the seller to pay it less per month, like $500, but with interest. Thus, you can wear the dress right away while payments are still ongoing for the next months. That example is a classic installment purchase. In other words, an installment contract refers to a purchase agreement of any type of property wherein the buyer pays it in specific periods while the amount gradually increases. Albeit the seller still owns the property, the buyer shall receive the title of ownership once he or she completes the final payment. Furthermore, legal consequences would follow whenever the buyer fails to commit to gradual payments.

Did you know that 35% of shoppers are usually going to buy when the business offers monthly installments for payments?

According to Statista, the average of consumers who engage in e-commerce transactions via digital or mobile wallet payment globally in 2019 reaches up to 41.8%.

The Pew Charitable Trusts also mentioned that around 10 million US citizens had considered annual installment loans while they spend higher than $10 billion for the payments and interest.


Installment Contract: Why Is It Essential?

The installment payment agreement has been popular with real estate sales or land contracts. Although mortgage and loan applications became more notable during the 1980s, land contracts dominated when the mortgage crisis occurred between 2007 and 2009. Therefore, more individuals used installment contracts and not just for house and lot since an auto sale, and many other examples got included. So, what makes the installment contract important? Installments are more flexible to use rather than mortgages because those who do not qualify for a mortgage can use an installment. Buyers benefit from the deferred payment, as long as buyers can fulfill the advance payment, instead of being forced to pay the high total cost in a single day. More so, the seller still owns the property as a security until the deed satisfies. Legal protection applies to the seller as well since he or she has a right to reclaim the product back in case the buyer failed with the contract regulations and stipulations.

What to Address in an Installment Contract

You can say that installments as a payment plan are popular. According to Small Business Trends, around 35% of consumers prefer purchasing through a monthly payment or installment anyway. Before you plan to make or sign any installment agreement, you should recognize what some of the commonly addressed sections are inside the contract. You aim to familiarize each example until you would not feel overwhelmed or unsure about some sections and clauses inside. Here are examples of what to address in the said contract:

Taxes: Taxing compliance is vital since legal action would follow for evading tax payments. Both parties must check the legitimate tax bills as evidence that taxes go accordingly with the law. Even so, responsibility allocation must happen if a taxpayer-to-non-taxpayer transaction were involved. Tax benefits, like a deduction, can be negotiable, and it would be a waste not to acknowledge those.Insurance: A seller may worry if the property given in the hands of the buyer is broken or lost. In promoting order to such a situation, insurance coverage should take part in the contract. Therefore, buyers receive the obligation to ensure that properties stay in pristine condition. This insurance is necessary since the seller still owns such a product if payments are still continuous. In addition, insurance policies should remain clear in the document to avoid issues.Interest: Increment payments occur in an installment, may that be a monthly, bi-weekly, or weekly payment. Interest is the one responsible for the increment since a deferred or delayed payment applies in the installment. Contracts will give the estimated interest rates to help prepare parties on how much the expected amount is.Governing Law: To comply with the law is no stranger to binding contracts since these official documents are enforceable by law. You state and clarify the rules and regulations inside the form until every party is aware of whatever comes allowed and prohibited in the contract.Condemnation: In an instance where properties are condemned while in an installment term, the seller and the buyer can have claims to take the interests in properties. Another agreement should come between both parties regarding the property’s market value until the proceeds to distribute go according to plan.

What Are Common Examples of Installment Contracts?

When you decide to choose an installment, you also specify what property you are processing. A bunch of examples exists, and you need to remain sure of your decision rather than continuing a mortgage or a loan. In fact, nearly 10 million Americans have processed for installment loans annually for bigger fees. You can avoid being tempted to loan by observing a flexible alternative like an installment. On the other hand, you might be interested in different property types to process with deferred payments. Here are some common examples of installment contracts:

House and Lot Installment

Upon dealing with a real estate sale contract, you can meet an installment with a cycle of payments covered. Your only concern is to be responsible for the continuous payments to avoid losing your property or land. A tip is to prepare a monthly timesheet, specifically for when you shall gradually pay until you cannot miss out on any date or time of when to cover the costs.

Vehicle Installment

Motor vehicle installments can be accepted by auto contracts as well. The rule stays as it is wherein buyers may use the property. In this case, you may ride the car from the auto installment, yet the owner still goes to the seller. Only when the contract is satisfied that the title is transferred to the buyer via a bill of sale.

Retail Installment

A sale between retail sellers and retail buyers, along with deferred payments, is called a retail installment. For example, a seller might plan to buy from the newly-released clothes from a trusted wholesaler. That way, the seller can keep up with the trends or what products are new while the price is paid in installment.

Technology Installment

Computers, cellphones, and other examples of gadgets or technology can also be bought through installments. Just make sure to discuss the terms of service and regulations with the seller on how it goes and what rules shall apply. Also, technology services have installments, too, wherein regular updates follow up.

How Do You Craft an Installment Contract?

Now for the real deal, how do you create an acceptable installment contract? You already know that consumers benefit from this cyclical payment if they have insufficient funds to make a one-time payment. Yet, benefits may not happen with a contract that got poorly created. Since you expect the contract to be legally binding, you make with considerable standards for it to be taken seriously. How do you do that? Just follow these steps:

Step 1: Draft the Whole Installment Details

What consists of the entire installment plan? That should be drafted first wherein you can list down everything from the property description, party information, down payment, financial plan, and other details. To make things easier, you can make your checklist to ensure you cannot forget any critical information when you finally transfer the details to the appropriate template or document afterward. Moreover, you can benefit from an installment sale calculator for a thorough calculation if the numbers are accurate enough inside your records.

Step 2: Make Use of an Installment Contract Template

When you finish drafting, you can check out our sample installment contract templates. You could even customize the template according to your fondness. Be sure you got the right example to use though in case you got mixed up with a severable contract, divisible contract, and other contracts. Or worse, you may have used the wrong template, which is no longer related to a contract or installment at all. Find the proper installment payment contract template instead.

Step 3: Fill in the Details Accordingly

Based on the information recorded in your draft, you handpick the essential and relevant details that should be present in the installment contract template. You need not include everything unnecessary anyway since only the vital parts deserve to be part of any contract. There are blanks prepared in some parts, too, so you only need to fill in every blank to complete the form. What makes the process simple is how there are sections on the contract to divide and arrange the information properly.

Step 4: Keep the Information Clear

From top to bottom, how clear is the message delivered in the contract? The key is to reread and review everything in case there are changes necessary to clear things out. Maybe the statement for the financial plan was not explained thoroughly. Since Statista stated that 41.8% of e-commerce consumers use a mobile or digital wallet for transactions, did you provide the mobile wallet contribution option to your contract too? It would have been easier if oral agreements were managed before the written contracts to gather insights ahead on what to input.

Step 5: Highlight the Important Parts

Indeed, sections are dividing the information for an arranged format or presentation. However, some parts that need to be evident may have been written in small fonts or are hardly seen by any reader. A tip is to use bold or capital letters on the significant parts like the payment schedule, payment amount, and many more. The party’s name before their signature requires that highlight as well so everyone can quickly see where to place the signature.


Can I get out of an installment contract?

You can get out of an installment contract. Do that as long as you follow what the agreement plan about how to deal with backing out. When a buyer commits a breach of contract, then it is most likely that the solution is that the seller can take the property back in possession, and the contract officially ends. Those who refuse to the rules stipulated in the contract may have to deal with the court to settle things out.

As mentioned earlier, the seller still keeps the title as the owner of the property. However, it can change once the buyer completes his or her contribution to the seller. If all payments reach its end, then the buyer is now the property owner.

How long does a land contract last?

Different information can be inside a land contract, so how long it lasts would depend on what got mentioned in its policy. However, a common installment for land contracts would be paid per month. More so, it often reaches around three to five years with interest included.

Back to the dilemma about patiently waiting or not wasting time in purchasing something, how can you cope with it? Easy, consider an installment purchase instead. In this option, you adapt patience while waiting to pay the property in full. But, time will not be wasted at all since you have the freedom to use such property. Remember that the buyer can use the property while the seller still retains ownership. In short, it is a win-win situation for both parties if anything stipulated in the installment contract is respected always.