In a financial context, an installment is generally understood to mean one of several payments made by one party to another as payment for a debt or the purchase of goods/services and so forth. Installment payments have become an extremely popular method of payment over the last few decades in the modern credit-driven world. One new wrinkle that has emerged is the idea of billing in one installment, sometimes called single-installment billing.
Traditional Installment Plans
Traditional installment payment plans assume several forms, including a simple subdivision of the total amount owed into a specific number of monthly payments or other more-complicated installment plans such as balloon payments that structure the amount and due dates of the installments as desired by the involved parties. So-called revolving credit plans such as credit cards can also be considered a form of installment payment.
One-installment billing plans, on the other hand, involve only a single payment by the payee/borrower, meaning the entire amount owed is paid in the first payment.
Popularity of Installment Plans
Installment plans have become hugely popular because they offer convenience to the consumer and profit to the merchant as interest is almost always charged on any unpaid balance (i.e., the amount to be paid in future installments).
Advantages and Disadvantages
One-installment billing plans are often designed so that the consumer can pay his bill conveniently and avoid interest charges; sometimes a discount is even offered for full payment in one installment. However, some businesses are now offering one-installment billing plans designed to collect payment in advance, although the consumer does not actually even owe the amounts yet, essentially enticing the consumer to pay in advance although it is not to their benefit. A number of online games and other membership-based Internet businesses charge consumers a monthly fee for the service, and some offer "one installment billing" for a year (or more), meaning that you are giving them money many months before you actually owe the money.
Clayton Browne has been writing professionally since 1994. He has written and edited everything from science fiction to semiconductor patents to dissertations in linguistics, having worked for Holt, Rinehart & Winston, Steck-Vaughn and The Psychological Corp. Browne has a Master of Science in linguistic anthropology from the University of Wisconsin-Milwaukee.