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A payment plan agreement is established between a debtor and a creditor, obligating the debtor to repay the owed amount as per the contract terms. Payment plans are commonly used for high-cost items and services, alleviating the upfront financial burden by allowing payments in installments. This arrangement can benefit both parties: it makes expensive purchases more manageable for buyers and can increase total income for sellers through interest charges. If the seller opts to charge interest, the buyer may end up paying more than the initial price. For those needing immediate access to goods, a payment plan can be an advantageous solution.
