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A payment plan agreement is a contract between a debtor and a creditor that outlines the terms for repaying a debt. Payment plans are commonly used for expensive items and services, making it easier for customers by spreading the cost over time. This arrangement benefits sellers as well, allowing them to potentially earn more by charging interest. Payment plans can be a convenient option for buyers who need immediate access to a product but may not be able to afford the full price upfront. The agreement ensures both parties understand their obligations and the total cost involved.