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A payment plan agreement is established between a customer and a creditor, committing the debtor to repay the owed amount according to the contract terms. Payment plans are commonly utilized for high-cost items and services, allowing businesses to alleviate the financial burden on buyers by spreading payments out. This approach benefits sellers as they can earn additional revenue through interest charges. While payment plans can apply to a variety of goods and services, they are particularly advantageous for customers needing immediate access to items. Additionally, the video outlines how to find a free payment plan agreement template.