Time-Sale Financing

Posted in Finance, Accounting and Economics Terms, Total Reads: 966

Definition: Time-Sale Financing

Time sale financing is a type of financing in which a third party buys installment sales contracts from a dealer, but the borrower has to pay back his payments to the lender.

The contracts in time sale financing are generally sold at a discounted value; i.e. at a value less than the par value of the investment under contract. The dealers are able to sell the contracts at a discounted value because of the dealer floor planning. Floor planning financing is a revolving line of credit which allows the borrower to take a loan for retail goods. And these loans require collateral as the underlying security. The collateral can be a housing property, homes, or automobiles. With the sale of retail goods, the borrowers can take further loan in their line of credit to add new inventory from the dealer.

Banks are the entities which use the time sale financing to borrow money commonly, but the other borrowers use this mechanism as well.


Hence, this concludes the definition of Time-Sale Financing along with its overview.

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