Guaranteed consumer funding

Guaranteed consumer funding is an type of credit similar to layaway, which allows consumers to purchase items on a payment plan regardless of their credit history.

This process requires signing a contract in which the consumer promises to make all of the payments in full by their due date. In return they will receive guaranteed credit and are allowed to use the product as they pay it off

With this type of loan the consumer does not receive their purchased items right away as they would using traditional credit purchasing methods. Instead they are expected to make a predetermined number of timely payments as a show of good faith. If those requirements are met, the consumer may collect their purchased items and continue to make the payments until the contract has been fulfilled and the item has been paid off.

Due to the nature of the purchase and the terms of extended credit, generally these services do not have a cancellation or refund policy. However this information must be a part of the signed contract to be enforced.

Along with secured loans / credit and layaway programs, guaranteed consumer funding is a good way to help re-build bad credit and establish credit for those without.

Seeing a payment contract to completion generally results in a positive report to the credit bureaus on your behalf.

If a contract is signed for the guaranteed credit services, than the consumer is protected by the truth in lending act which requires lenders to fully disclose all terms of the agreement to potential customers. These terms include but are not limited to: duration of the loan, required payments & their due dates, cancellation / refund policy, availability of the merchandise, and total cost to the consumer.

References

[http://articles.latimes.com/1999/nov/01/local/me-28629 LA Times - The Lowdown on Layaway, Credit Card and Check Transactions]

[http://www.ftc.gov/bcp/conline/pubs/buspubs/layaways.shtm#2 Federal Trade Commission- Facts for Businesses Offering Layaways]

[http://edis.ifas.ufl.edu/HE815 University of Florida - Layaway Purchase Plans]

[http://www.sptimes.com/2003/11/26/Business/The_unlost_art_of_lay.shtml St. Petersburg Times - The Unlost Art of Layaway]

[http://www.ftc.gov/bcp/conline/pubs/credit/repair.shtm Federal Trade Commission - Facts for Consumers]


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